FACT ONE:

When we die the total value of our assets is added up to produce a figure for our estate. Every year an allowance is set saying how much we can leave without paying any tax at all. In the 2006-07 tax year the allowance is £285,000 and for the 2007-08 tax year it is £300,000 - the figures are sometimes referred to as ‘the nil rate band’. If the total value of your assets minus your debts is worth more than this figure then tax is likely to be payable, at 40 per cent of the excess. So if you estate is valued at £299,000 in the 2007-08 tax year there will be no tax to pay. If it is valued at £301,000 then a charge of 40 per cent of the £1,000 excess may be due. If it’s worth a million then the tax is due on the £700,000 excess and could produce a bill as large as £280,000.



Inheritance tax 'does not just affect the rich'

Inheritance tax is an issue about which every Briton should be knowledgeable, it has been suggested.

Many people who think that they will not be affected by inheritance tax because they are not rich are mistaken in their assumption, according to financial services company Edward Jones.

The firm says that rising house prices make inheritance tax liability more of a likelihood for the average homeowner.

Matthew Moyes, a financial adviser and stockbroker with Edward Jones in Norwich, commented: "Many people don't realise how much their estate can amount to once everything is taken into account - house, car, possessions, business interests, savings, shares, jewellery and so on.

"It's very easy for an estate to be worth a lot more than the current £300,000 inheritance tax threshold, with tax charged at 40 per cent on everything above this limit."

He also challenged the assumption that assets pass to people's "nearest and dearest" upon death and recommended making a will in order to help limit any inheritance tax liability.

Edward Jones is holding a free seminar to help advise on these and other related issues in Norwich on June 28th.

The company is regulated by the Financial Services Authority and is a member of the London Stock Exchange.

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