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Currently Inheritance Tax is not payable on estates valued under £325,000 (this is called the 'nil rate band'). Inheritance Tax is payable at a rate of 40% on any balance over the nil rate band.
Transferable nil rate band
As previously mentioned, everyone has a nil rate band of £325,000.00.
Upon the death of the first spouse (or civil partner) providing the entire estate is passed to the surviving spouse (or surviving civil partner) then on the death of the survivor the whole nil rate band on the first death is applied to the second death. Therefore, there is a double nil rate band available.
Under current rules this would mean that Inheritance Tax would only be charged on the estate over £650,000.00.
However, if only part of the estate is left to the survivor then only half of the nil rate band can be transferred and therefore double nil rate band is not available.
For professional Legal Advice about inheritance tax, contact a member of our Private Client Department on 0151 239 1064 for straightforward advice to meet your personal circumstances or complete our short online enquiry form.