How is inheritance tax calculated?
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This is more complicated that most people believe. It is based on the value of the estate of a deceased person at the time of death less available allowances plus value of any direct gifts or gifts into trusts over £3000 in value gifted in the previous 7 years. Allowance are usually a Nil Rate Band of £325,000 and a residential Nil rate band of £175,000 if a person owns or has owned a UK home.(This can be reduced for estates over £2 million). However if large gifts of over the NRB have been made in the 7 years before death taper relief (a reduction in the tax payable) is applied