In calculating Total Net Value applicable to Inheritance Tax Threshold there are various exemptions that might be available to the estate. YouCanDoProbate will automatically apply the exemption(s) should the estate quality.
Assets passing to the spouse or civil partner #
Broadly, assets that pass to the deceased’s spouse or civil partner are exempt from Inheritance Tax, therefore effectively reduce the value of the estate. If most of the assets pass to the deceased’s spouse or civil partner it is likely that there will be no tax to pay. If there is no tax to pay because of this exemption, and the estate meets the other conditions that apply, mainly that the gross value is £1million, then the estate will qualify for IHT205.
Assets passing to a Charitable Beneficiary #
Broadly, assets that pass to a qualifying charity are exempt from Inheritance Tax, therefore effectively reduce the value of the estate. For more information about Charitable Beneficiaries please read Assets passing to a Charitable Beneficiary.
Transfer of Unused Nil Rate Band #
If the person who has died was pre-deceased by their spouse or civil partner it may be possible for them to claim what is known as ‘Transfer of Unused Nil Rate Band’. This means that any part of their partners unused nil rated band (the amount that can be left tax-free), that was not used when the first spouse or civil partner died, can be transferred to the surviving spouse or civil partner for use by their estate, on their death. For deaths prior to January 1 2022, to use this exemption you must submit your application no later than 24 months after the end of the month in which the deceased died. For example, if the deceased died on 10 October 2019, you would need to send this form with form IHT205 by 31 October 2021.
For more information about Transfer of Unused Nil Rate Band, please read Transfer of Unused Nil Rate Band.