Martin Lewis has reassured people worried about Inheritance Tax (Image: ITVX)
Martin Lewis has urged people not to worry about Inheritance Tax – because the vast majority aren’t going to pay it.
The money expert returned on The Money Show Live on on Tuesday, March 11, where he took his audience through the vagaries of the much dreaded tax on your estate after you die, which in recent months has been the subject of much attention following the government’s decision to scrap some Inheritance Tax reliefs on farmers.
told his ITV audience: “Most people shouldn’t worry about , because you’re not wealthy enough, being absolutely blunt.
:
“Only 6% of estates pay , the vast majority don’t. Even once pensions are included, and it is proposed in 2027, still the huge majority of estates won’t pay Inheritance Tax.”
Martin also explained that anything you leave to your spouse is exempt from Inheritance Tax, but not someone you’re living with, you have to be married or in a legal civil partnership.
He also said that there is no to pay if your estate is under £325,000 when you die, and £175,000 is added on top of that if you are giving away your main residence to your direct offspring, i.e. kids and grandkids.
Your spouse can also inherit your unused allowances, to boost your Inheritance Tax threshold up to £1m.
If you do go over the thresholds, you have to pay 40% of every £1 over the threshold. So no Inheritance Tax to pay on the first £325,000 (or £1m if you passed on a main residence and your full cash allowance to your spouse), and then 40p in every pound thereafter. If you find you are likely to pay the tax, there are ways to reduce your bill by gifting before you die.
Martin added: “It’s 40% of everything, so every £100,000 it’s £40,000 that you are paying.
“If it’s likely you will pay Inheritance Tax, then the gifting rules can help.
“Anything you give away and you survive seven years afterwards, there’s no Inheritance Tax to pay. In fact even if you survive three years, the Inheritance Tax rate is lowered.
“The next most important one is regular gifts given from your income do not count towards Inheritance Tax.”
The Martin Lewis Money Show Live, Tuesday March 11 episode is still available to watch on ITVX.