The Law Of Inheritance Tax In The UK
Laws, rules, and regulations are designed to ensure justice and equality maintenance in a state. At the same time, tax laws are generated in order to produce revenue for the government that eventually support its operations. The government of a country has a number of sources to produce revenue for its functioning. Taxes are one amongst the most regular sources of revenue for a state.
The government of every state is supposed to carry out a lot of duties. To perform these duties government needs revenue that is taken in the form of tax. Thus, all sorts of taxes and duties on imports and exports are taken in order to collect enough revenue to perform these duties.
If someone inherits his/ her property, a certain amount of inheritance tax is paid to the government in the United Kingdom. Inheritance tax is calculated on the basis of certain laws. In the United Kingdom, when somebody inherits some property, a 40% tax is payable on the value of inherited property over and above the Nil Rate band. The Nil Rate band for the year 2009-2010 is 325,000.
As far as the tax laws of the UK are concerned, if after the passing away of the foremost spouse, some part or the whole amount to be included in the Nil Rate band is not at all used, it is transferred and is accessible to use at the instance of passing away of the second spouse. For instance, if A died and left 200,000 worth of taxable estate and the Nil Rate band for that year was 400,000 and B, the remaining spouse, didn’t use 50% of the Nil Rate band, it is conveyable for the estimate of tax for the inheritance when the remaining spouse dies.
In this case, let us suppose when B dies, she leaves behind an estate of 400,000 then the Nil Rate band would be the exempt amount plus 50% of the Nil Rate band i.e. 450,000 if the Nil Rate band for the year were 300,000. The Nil Rate band is the amount of exemption granted by the government for the calculation of tax on the inherited of property.
If A leaves 400,000 value of property to his beneficiary, and the Nil Rate band for the year is 325,000, the amount on which the tax would be applicable would be 75,000. Whereas, if A had left behind an estate worth less than 325,000, for example, a property worth 300,000, there will be no tax applicable on the amount inherited by the heirs.
The matters related to inheritance may become very complicated sometimes, therefore, it is advisable to hire a professional property consultant since a professional property consultant is aware of all the rules and regulations about management and inheritance of property.
However, some people believe that it’s just a waste of money to hire a property consultant. According to them, they can easily carry out all the works that need to be done in this regard, while in fact it may cause them a huge loss in the longer run.
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