IHT is charged at a flat rate of 40% on your estate at death. Your estate will include all the assets you own, such as your house, cash in bank accounts and personal belongings, but will also include any foreign assets, any assets you have given away in the last seven years, assets which you have given away in which you still retain an interest, and also the capital value of trust funds from which you receive an income.
Some exemptions help to reduce the IHT that will be payable. The main exemption is the Nil Rate Band. From April 2009, this is £325,000. This means the first £325,000 of your estate will be exempt from tax - however, if your home or your share of your home is included in your estate, it is easy for your estate to exceed this threshold.
There are various methods of planning your estate to ensure it is both efficient for IHT purposes and provides for your beneficiaries properly. A professionally drawn Will is always the foundation of IHT planning.
At IFS we can discuss the options available and the most appropriate planning tools for your specific situation.