15:49 27 February 2013
So you just got the news that your favourite uncle from Abingdon left you a considerable inheritance upon his passing? But what should you expect? Well, one thing no doubt is that an inheritance tax must be paid by the estate before you get a penny. That’s not an option.
So what is an inheritance tax? An inheritance tax is the government’s way of levying a fee against all property, possessions and cash left behind when someone passes away. Unfortunately it’s like receiving double taxation because the proceeds have probably been taxed beforehand. But that’s really a moot point when it comes to government taxation.
So here’s what you can expect:
•The inheritance tax is computed by adding up the value of all items and money (and any gifts donated within the last 7 years) left by the estate that is above £325,000 and multiply by 40per cent (the usual tax rate).
•If your uncle left part of his estate to charity, do not include this amount in your computation as all charitable donations are considered non-taxable.
•Expect that it may take up to six months to get this inheritance tax mess taken care of. So just expect that it will be a while before you can truly enjoy your uncle’s generosity.
So what is the best way to approach this unexpected blessing and the inheritance tax due? The best thing you can do is be knowledgeable and understand the process. Of course you cannot change the law, nor can you expect the law to change for you.
So, simply put, comply with the requirements and appreciate your uncle for caring for you enough to leave you the inheritance. After all, it’s more than you had before. Enjoy your blessing!
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