Inheritance tax is a tax on the inheritance of estates and is payable by the person who inherits the estate. In most cases, it is charged at a rate of 40%, which means that half of the value received from an inheritance above the threshold is taxed. The threshold for inheritance tax will be increased as of April 2022 to help reduce inequality and make it easier for people to pass on their assets to their children.
What is Inheritance Tax?
Inheritance tax is an indirect tax paid on the transfer of property, such as land or shares. This can be a significant amount of money for families that are left with a large estate. It has been decided that the inheritance will now fall within the threshold for capital gains tax which is £325,000. The Inheritance Tax threshold is based on the marriage rate of the deceased at the time of their death. A married person can have as many as five spouses in total. If one spouse dies before any other, then the surviving spouse will receive a basic allowance of £325,000 to be able to pass on assets from the deceased to them. This year’s annual allowance for an unmarried person is £650,000 which is increased to £700,000 for married couples.
Inheritance Tax Threshold to be raised from £325,000 in 2019 to £450,000 in 2022
The UK has changed its inheritance tax threshold. The new threshold will be £325,000, which is a $450,000 US dollar amount. This will be the first time the country has raised the threshold since 2001. This will bring the threshold level in line with inflation. The new threshold will also apply to those who have died since 2001 from estates where the probate value (the amount being transferred) is less than £325,000. This means that it is very likely that many estates will be subject to inheritance tax. The UK government has decided to raise the inheritance tax threshold from its current level of £285,000 to £450,000 in 2022. This will be the first time that this particular threshold has been raised since it was first introduced in 1984. The change is mainly due to the ongoing increase in housing costs and a larger number of people facing higher levels of debt.
Some of the reasons for this increase
To increase the number of people that are exempt from inheritance tax, the United Kingdom Parliament has raised the inheritance threshold. This means that any individual with a taxable estate valued at less than £325,000 will not have to pay any taxes on their estate. For estates valued between £325,000 and £650,000, only 50% of the estate will be subject to tax. For estates valued at more than this amount, 100% of the value becomes taxable. In addition to this change in the laws governing inheritance tax, several other factors have also been influential. One factor influencing these changes is that many individual’s wage packets are no longer large enough to cover their basic needs and therefore they must consider having to move home
Conclusion
The inheritance tax threshold will be raised in the UK for the first time. This change will come into effect on October 1st, 2018 and it will raise the threshold to £1m. The government hopes that this will reduce the number of families struggling to pay an inheritance tax bill.
