\n On his podcast, the founder of MoneySavingExpert has broken down the complex rules behind Inheritance Tax, explaining how allowances work and why many estates never end up paying the charge.\n<\/p>\n
\n Inheritance tax is the levy applied to someone\u2019s estate when they die, including assets such as property, savings, investments, businesses and other valuables.\n<\/p>\n
\n But Lewis says the rules mean many people can pass on large sums without triggering the tax.\n<\/p>\n
\n \u201cYou can leave a substantial amount without paying any inheritance tax at all,\u201d he explained.\n<\/p>\n
The HMRC \u00a3325,000 tax-free allowance<\/p>\n
\n For someone who is not married or in a civil partnership, the starting point is the standard inheritance tax allowance.\n<\/p>\n
\n \u201cThe basic allowance is \u00a3325,000, which is the amount you can leave without paying any inheritance tax on it,\u201d Lewis said.\n<\/p>\n
\n \u201cIf the total value of what you leave is less than that, there\u2019s no inheritance tax to pay.\u201d\n<\/p>\n
\n Anything above that threshold is normally taxed at 40 per cent.\n<\/p>\n
The extra \u00a3175,000 home allowance<\/p>\n
\n Many families can increase their tax-free limit if they leave their home to direct descendants.\n<\/p>\n
\n \u201cIf you\u2019re leaving your main residence to your children or grandchildren, there\u2019s another \u00a3175,000 allowance,\u201d Lewis explained.\n<\/p>\n
\n \u201cWhen you add those two together, you could leave up to \u00a3500,000 without paying inheritance tax.\u201d\n<\/p>\n
\n This additional threshold is often referred to as the \u201cresidence nil-rate band.\u201d\n<\/p>\n
Married couples can pass on up to \u00a31 million<\/p>\n
\n The rules become even more generous for married couples and civil partners.\n<\/p>\n
\n Lewis says there are two major benefits.\n<\/p>\n
\n \u201cThe first is that anything you leave to your spouse is exempt from inheritance tax,\u201d he said.\n<\/p>\n
\n \u201cSo even if you were incredibly wealthy and leaving billions, there would be no inheritance tax when it passes to your husband, wife or civil partner.\u201d\n<\/p>\n
\n The second benefit is that unused allowances can be transferred to the surviving partner.\n<\/p>\n
\n \u201cImagine you die and leave everything to your spouse,\u201d Lewis explained.\n<\/p>\n
\n \u201cThat means your allowances haven\u2019t been used. When your partner later dies, they can combine their allowance with yours.\u201d\n<\/p>\n
\n \u201cThat means together they could leave up to \u00a31 million to their children without inheritance tax.\u201d\n<\/p>\n
\n Who Really Pays Inheritance Tax? In 90 seconds.<\/p>\n
Full Inheritance Tax info including how give & live, pensions, marriage, charity and more in the new Martin Lewis Podcast on https:\/\/t.co\/ioY6k8kVTb<\/a>, Apple, Spotify & all the usual pod players. pic.twitter.com\/BdxOPoGaW0<\/a>\n <\/p>\n