Inheritance Tax rates
The standard Inheritance Tax rate is 40% which can be reduced to 36% if you give 10% of your Estate to charity. It’s only charged on the part of your estate that’s above the tax free threshold.
ExampleYour estate is worth £500,000 and your tax-free threshold is £325,000. The Inheritance Tax charged will be 40% of £175,000 (£500,000 minus £325,000). But by 2020 with the additional RNRB allowance there would be no Inheritance Tax payable because by then thetax free allowance will be £500,000 (£325,000 and the RNRB of £175,000)
The estate can pay Inheritance Tax at a reduced rate of 36% on some assets if you leave 10% or more of the ‘net value’ of your estate to charity in your Will.
How Much IHT Will I Have To Pay?
First, work out the value of the assets that you own, but don’t include your pensions. And then subtract the current IHT thresholds including the RNRB and any liabilities you need to pay, such as mortgages, credit card balances, loans etc. You will have to pay 40% of the next balance
If you’re married you can combine your thresholds.
But as you can see, it's quite possible your IHT due can be sizeable.