How to deal with inheritance tax

An expert on the subject has offered advice to people about how to handle inheritance tax.

Sarah Pennells, personal finance expert from SavvyWoman.co.uk, told BBC Radio 4 Money Box that those who are concerned about how to leave money to their loved ones should know that they will not have to pay inheritance tax unless their estate is worth more than a certain amount.

"There is generally inheritance tax to pay on the balance above £325,000 at 40 per cent, which can be quite a lot," she said.

However, Ms Pennells advised people that they can give money away during their lifetime; £3,000 each year to an individual of choice and unlimited gifts of £250 to different people.

She also said that individuals may not be aware that they can make gifts out of income under normal expenditure, where they can use income that they do not need to give regular amounts or presents to a family member.

In addition, Helen Hill, general manager at the Society of Will Writers Trust Corporation, said that if people have a loved one who has recently passed away they should fill in an application for a grant of probate, as well as giving the HMRC the details required so that they pay the correct amount of inheritance tax.

Published by Hannah Carr