Common questions

When someone dies, inheritance tax is payable on all their assets over a certain level (the 'nil rate band'), subject to various exemptions and reliefs. The current rate of taxation is 40%, and the nil rate band for the tax year 2011/12 is £325,000.

The first thing you need to do is decide who should benefit from your estate. Some types of estate planning pass the tax liability on to the person who benefits. For example, any assets passed to a husband, wife or civil partner are exempt from inheritance tax (as long as they're UK domiciled). However, passing assets to a husband, wife or civil partner simply delays inheritance tax liability until their death. So you may want to skip a generation and pass your estate on to your children or grandchildren, for example.

Gifts to charities or political organisations are exempt from inheritance tax, whether they're included in a will or made during your lifetime.

A will is the first step in effective estate planning. It's especially important for people who are unmarried or have unusual family circumstances. If you don't have a will when you die, some surprising people could benefit.

If you're a member of your company pension scheme, the benefits will normally go to the person you've nominated. It's important you review this regularly and update it when necessary. If you have a different type of pension scheme, it may be possible to take action to make sure that the benefits aren't liable to inheritance tax.

If you aren't UK domiciled, or if you live outside the UK we recommend that you seek appropriate professional advice to review your tax position.

This information is based on our understanding of current legislation, taxation law and practice, which may change. The value of any tax relief depends on the individual circumstances of the investor.