There are three main taxes that you may have to deal with when someone close to you dies.
If it is likely that tax will be payable we recommend getting professional help with the estate.
This is a tax on someone's assets when they die. Currently the value above which inheritance tax is payable is £325,000, which rose from £312,000 on 6th April 2009. Everything over that amount will be subject to a tax of 40%.
A higher allowance may be available if the deceased was a widow or widower.
The persons' assets may include:
- Insurance policies
- Individual items such as cars, jewellery, paintings
- Gifts that the person made but were benefiting from, for example if they had given their property to someone else but were still resident there
- Gifts that they had made in the last seven years
- Assets held in trust that generated an income
Some income is taxable above a certain level. The following could be subject to income tax:
- Earnings from employment or self-employment
- Pensions - state, company and personal
- Interest on savings
- Income from shares (dividends)
- Rental income
- Income paid to you from a trust
Capital Gains Tax (CGT)
The estate of the person who died may be liable to CGT on things they owned that they sold, gave away or transferred wherever in the world they were located. CGT is a tax on the profits or gains that they made on the disposal of these assets.
There are various tax forms to complete for each of the above, differing in complexity depending on the person's financial situation.