Inheritance tax otherwise known as death duties is the amount of tax payable on a deceased person’s estate.
The current level of inheritance tax is 40 per cent charged on all assets above the threshold which is currently £325,000. The government has pledged that this limit will be fixed until April 5th 2014.
Married couples can effectively double this limit as any assets passed onto a spouse are exempt from death duties and the surviving spouse is given their partners allowance meaning that the surviving spouse can pass on £650,000 tax free provided they and the original spouse are both UK domiciled.
Apart from the first £3,000 each tax year, any money given away within the final seven years of your life can qualify as part of your estate for inheritance tax purposes. Gifts to charities and political parties are also outside the scope of inheritance tax.
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