Under current law, if your estate is worth more than £325,000, your beneficiaries will have to pay 40% of the part of it that’s over the threshold to HMRC.
So if your estate is worth £350,000, £25,000 of it is liable for inheritance tax, and your beneficiaries must pay £10,000 (40% of £25,000) to HMRC.
The threshold and the rate change from time to time, so check the current figures on the gov.uk website
What if you leave money to Charity
There are two ways leaving a gift to charity can help reduce your inheritance tax bill.
If you leave gifts to charity in your Will, the gift value won’t be counted towards inheritance tax. The same goes for gifts left to your spouse. This could reduce what your beneficiaries have to pay, or remove your inheritance tax liability altogether.
In April 2012, inheritance tax legislation changed, meaning in some situations, anyone leaving 10% or more of their taxable estate to charity may qualify for a reduced rate of inheritance tax – 36% rather than 40%.
To find out more about inheritance tax and estate planning, talk to your solicitor to see how the rules might affect you and your loved ones.