1. Inheritance tax basics

Inheritance tax (IHT) is often referred to as the grave robbers’ tax and not without reason. It is perfectly possible that wealth you accumulate during your lifetime that has already been subject to various taxes, e.g. income tax, can then form part of your taxable estate for IHT purposes.
To illustrate just how severe things can be, imagine an additional rate taxpayer who receives a bonus of £100,000 from their employer. This will be subject to tax at 45%, and Class 1 NI of 2%, leaving just £53,000 in available cash. Now let’s suppose the unfortunate individual dies the day after the payment is made. Assuming they have no nil rate band (NRB) available, the £53,000 will be subject to IHT at 40% - meaning the Treasury will pocket a furth...

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