Ask an Expert

What is inheritance tax?

Inheritance tax is a tax on your estate when you die. Your 'estate' means everything that belongs to you, including your home, personal belongings, savings, investments, and so on.

If your estate is taxable, the tax must be paid before anyone can inherit.

How much is inheritance tax?

Inheritance tax is payable at a flat rate of 40%. However, only 4% of estates currently pay inheritance tax. The other 96% are tax-free. I will explain why.

Every estate has a tax-free allowance on which no tax is paid. There is no tax on the first £325,000 of assets (the Nil-Rate Band). So, unless your estate is worth more than £325,000 there will be no tax.

If you leave your whole estate to your husband, wife, or civil partner there will be no tax. It is the same if you leave it to charity. Gifts to your spouse or charity are exempt from inheritance tax.

If you leave only part of your estate to your spouse or charity, the remaining part may be taxable, but only if it exceeds the Nil-Rate Band.

Does it

make a difference if I'm not married to my partner?

I'm afraid it does. No matter how long partners have been together, anything they leave each other won't be exempt from tax, unless they're legally married or registered civil partners. And if one partner dies without leaving a will, the survivor won't automatically inherit anything.

When unmarried couples ask me about inheritance tax, you can guess what advice I give!

Are there other tax-free allowances?

If your spouse dies first, leaving everything to you, your estate gets an extra Nil-Rate Band. Then the first £650,000 that is not exempt will be free of tax.

If only part of your spouse's estate is left to you, then you may still get part of the extra Nil-Rate Band, depending on how much your spouse left to other people.

The Residence Nil-Rate Band (RNRB) is a separate allowance. Subject to conditions, this can apply if you leave property you have lived in to your children or other descendants. This can be up to £175,000 per estate. You and your spouse each have a separate RNRB, and in this way up to £1 million of your combined estates can avoid tax.

Can I save my children inheritance tax by giving them my property now?

Anything you give away in your lifetime may still be taxed as part of your estate if you die within seven years. Even after seven years, a lifetime gift may still be taxed when you die if you still receive a benefit from it. Giving your home to your children may not save inheritance tax if you continue to live there and may have other tax consequences too.

There are other inheritance tax exemptions relating to gifting that you can make during your lifetime that are less restrictive than gifting your home - you could ask your solicitor when making your will.

Is inheritance tax about to be abolished?

We will find out on 6 March 2024!

The second instalment of Lewisham’s high streets study – launched by the Council in 2021 – has revealed that independent businesses remain the driving force behind the borough's high streets, constituting two-thirds of all traders, with 65% owned by Black, Asian, and Minority Ethnic entrepreneurs.

Research carried out by London South Bank University’s Business School in 2023 across nine of the borough’s bustling high streets showed that despite wider economic challenges and the ongoing cost-of-living crisis, Lewisham’s independent business owners are feeling confident about their futures and positive about the borough.

Other key findings from the survey include:

• Seven in ten independent business owners rate Lewisham as an excellent place to do business. Initiatives such as London Borough of Culture 2022 were highlighted as having had a positive impact on businesses by boosting footfall and increasing pride in the local area.

• There is long-term confidence on the borough’s high streets, with almost 90% of business owners surveyed saying they