Do you pay tax on assets or cash you inherit?

11 Oct 2017

As a general rule, inheritance tax (IHT) is collected from a person’s estate when they die and can also be payable during a person’s lifetime on certain trusts and gifts. There is normally no tax to be paid if the value of the estate is below the IHT nil rate threshold of £325,000. There is also a new IHT main residence nil-rate band (RNRB) that was introduced in April 2017. The RNRB will ultimately allow for a £175,000 per person transferable allowance for married couples and civil partners when their qualifying main residence is passed down to children after their death. The RNRB is in addition to the £325,000 IHT threshold.

The remaining amount after deducting IHT exemptions, reliefs and the nil rate band is liable to IHT at 40%. A reduced rate of IHT of 36% applies where 10% or more of a deceased’s net estate is left to charity. In some circumstances, the inheritor may be liable to pay IHT if the deceased person's estate can’t or doesn’t pay. There can also be IHT payable by the inheritor, if an inheritance is put into a trust that doesn’t pay the IHT due. HMRC will contact inheritors that are required to pay IHT.

Planning note

The inheritor is also liable to pay tax on any profit they make from inherited cash or assets. For example, where a property is inherited and then rented - income tax would be due on the rental income (subject to the usual rules). Likewise, if assets are inherited and subsequently sold, capital gains tax would be due on the increase in value since the person died.

There are legitimate ways to minimise any IHT due to the Exchequer. These can include giving away surplus income, making gifts before you die (known as Potentially Exempt Transfers) and giving gifts to charity. We would be happy to help you look at your estate planning options.

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Timothy's Bridge Road,
Stratford-Upon-Avon,
Warwickshire,
CV37 9NP
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Case Studies

Grenfell James Associates - The Senior Team

Grenfell has a broad range of experience and knowledge, working with clients from many different industry sectors. Grenfell is also the senior audit partner in the practice. 

Grenfell James

Chairman FCA

Chris works with a diverse profile of owner managed businesses to assist them to grow and retain wealth. Although Chris works with clients from a wide range of sectors, he has particular expertise in property, catering, consultancy and professional services.

Chris Wood

Managing Director ACMA

Alex has worked for Grenfell James since 2002 and became a director in 2013. Overseeing our internal operations, he manages the flow of work and ensures we hit our strict deadlines. Alex also manages a portfolio of clients, with expertise in manufacturing and service businesses.

 

Alex Enstone

Operational Director MAAT

David has worked for Grenfell James since 2006. He heads up our tax team and is highly experienced with expertise in different industries and sectors.

David Murphy

Tax Director ACCA

Hannah qualified in 2016, having worked for the company since 2009. She acts as a client manager for a range of businesses, with expert knowledge of the equestrian and rural sector. Hannah also manages our payroll team.

Hannah Watson

Client Manager ACCA

JP qualfied in 2014, having worked for Grenfell James since 2007. He is a client manager for a diverse portfolio of clients including those in the manufacturing and serivce industries. 

 

Jon-Paul Lawrence

Client Manager ACCA

"We have used the services of Grenfell James since the inception of our business. They advised us strategically through the incorporation of our partnership and have taken over our payroll function, aswell as advising us on a continuous basis on accountancy and business matters. The team are incredibly friendly, knowledgeable and their advice is always excellent. "

IO Studios

"Thank you Grenfell James for providing an excellent service for both me and Proco. Everything you have said and done has been spot on and on time. A great team and very friendly. Regards, from a very happy customer. "

Proco Coatings & Laminates

"Grenfell James provide an excellent service with all accounting details explained in a very friendly and understandable manner. I have no hesitation in recommending them to any business wanting concise and reliable service at a very reasonable price.   "

Mr I Cameron

"JP has looked after my accounts for a couple of years now, & I have to say nothing is too much trouble for him. As someone who fully appreciates that I know my business, but will always be guided by those who are experts in their own respective discipline, I have never once sent a request or query & not had a reply almost instantly. Highly recommended!     "

Dean. Wootton IT

"For our cash hospitality business, prompt, accurate numbers matter, and the ability to call quickly for break-downs and analysis. GJ is always responsive and ready to be on the case. We never feel short-changed. "

Andrew Knight. The Howard Arms Ilmington

"I am delighted with the professional and efficient way in which Grenfell James Associates do things. In particular, they return my calls quickly, do the things they say they are going to do and do them when they say they are going to. Since our group was established in 1991 they developed all the financial systems that robustly stood the test of time, coping with many millions of pounds of transactions "

Regent Square Estates

"Since taking over the accounting for our two businesses, Grenfell James have taken away any stress we have had in the past with our accounts. They have been very approachable and easy to talk to, enabling us a better understanding of how we need to run our business. "

Paul Stanley. A S Contracts Ltd.

"I think you do a great job. You are so approachable and flexible in terms of when you can meet us. "

Mckechnies independent tea and coffee bar.

"In the past we have been unfortunate to work with some less than reputable accountants. Grenfell James Associates have restored our faith in the accountancy business and assisted us with every aspect of our financial responsibilities. We now have a renewed confidence in our finances, knowing that all our affairs are being dealt with in an efficient and professional manner. Thank you to the whole team and we look forward to many years of working with you. "

NPD Design Consultants Ltd

"Grenfell James have been an amazing partner, managing the pressures that come with taking a start up to a multi million pound concern in 18 months is never easy, but these guys were both strategic and responsive with great ideas and exacting execution   "

Roy Ferguson. The Perfect Cosmetics Company.

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  • 13, The Courtyard
    Timothy's Bridge Road
    Stratford-Upon-Avon
    Warwickshire
    CV37 9NP
  • 01789 294484
  • 7-8 Stratford Place
    Mayfair
    London
    W1C 1AY

  • 0207 495 0304
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