Inheritance Tax 
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Inheritance Tax: Calculator
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How to Avoid Inheritance Tax & Tax Planning for Couples
Chargeable Lifetime Transfers & Potentially Exempt Transfers
Without effective Inheritance Tax planning, and in today's climate of high house prices/values people can end up leaving a heavy tax liability on their death which may result in the gifts left in the Will having to be sold or at least substantially reduced to allow the tax to be paid.
Inheritance tax is currently charged at the rate of 40% on estates over £312,000 and whilst this may seem like a generous figure, when one takes into account the value of property, assets, life policies and savings it will soon become apparent that this figure can be easily reached and taking into account the fact that certain assets - such as property for example - can increase in value over time. The Inheritance Tax Calculator below is intended to help you gauge some idea of how much tax your estate could potentially accrue. The basic calculator takes into account the values of main assets, savings and liabilities.
How to Use the Calculator
This calculator gives only an indication of the potential inheritance tax liability and does not take into account any IHT planning that has already taken place.
The calculator assumes the current nil rate band of £312,000 is applicable.
NB: There has to be a figure in every box, before you press calculate, even if it is zero
NB: You will need to have javascript enabled in order to use this calculator.
Life Insurance Policies
In addition to the various other planning methods which can be employed to minimise the amount of inheritance tax payable on an estate, another valuable method involves taking out life insurance policies.
One idea is to use the annual gifting allowances as a life insurance premium payable yearly into a life insurance policy which only pays out the sum assured on the death of the last survivor. The value of the sum assured is calculated to equal the amount of the inheritance tax liability.
Furthermore, if the policy is written into trust for a specifically named beneficiary, this means that the policy will not become part of the estate and the proceeds are payable virtually immediately upon presentation of death certificate, thus avoiding having to wait for a grant of probate. For this reason, a lot of people take out life insurance policies to cover the cost of inheritance tax so that their trustees can speed up the administration process by clearing the inheritance tax bill as soon as possible, thus reducing further costs.
For more detailed information about life insurance, why it is needed, the various different types download the free Motley Fool's Life Insurance Handbook.
