Inheritance Tax rates: Expert reveals a ‘useful way of reducing your Inheritance Tax bill'

Inheritance Tax may not be required to be paid, however there are some instances where the tax must be paid on the estate (meaning the property, money, and possessions) of someone who has died. Usually there is no Inheritance Tax to pay if the value of a person’s estate is below the £325,000 threshold.

It may be that a person can access a reduced Inheritance Tax rate, as James Kipping, Tax Partner at MHA Macintyre Hudson, has explained.

Speaking to Express.co.uk, Mr Kipping said: “If you give to charity during your lifetime or in your Will the value of those bequests is free of Inheritance Tax, so it can be a useful way of reducing your Inheritance Tax bill, while benefiting a good cause.

“If on death you leave at least 10 percent of your estate to charity, it will cut how much Inheritance Tax is due on the rest.

“The rate at which Inheritance Tax is calculated is 36 percent rather than 40 percent.

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“This rate is set against the balance of the estate to the extent that it exceeds the available nil-rate band (currently £325,000, although it can be reduced or eliminated by certain gifts made in a person’s lifetime).

“This means your favourite charities benefit and so does your family by paying a lower rate of Inheritance Tax on the remaining assets.”

Claire Trott, Head of Pensions Strategy at St. James’s Place, has also shared some insight into some financial decisions which may result in a reduced Inheritance Tax bill.

Speaking to Express.co.uk, she explained that it may be that parents or grandparents opt to save money for a child or grandchild.