If you want to leave money or property to loved ones, make sure to think about Inheritance Tax (IHT). If your estate (the amount you have to leave) is worth more than the Inheritance Tax threshold, then there’ll be inheritance tax to pay on anything extra.
The current Inheritance Tax threshold in 2016/2017 is £325,000. Usually anything above that will be taxed at 40% (unless 10% of the deceased's estate has been left to charity, then the rate is 36%).
Anything you gave away within seven years of your death also gets taxed, although there are exceptions – for a list of exemptions, see GOV.UK Inheritance Tax - Gifts. You should also look into the possibilities of leaving assets and money in trusts.
From April 2017, each individual will be offered a family home allowance so they can pass their home on to their children (including step, adopted and foster children), grandchildren or great grandchildren tax-free after their death. This will be phased in from 2017-18. More information about this is available from the GOV.UK Summer budget 2015: key announcements
There are a lot of options when leaving a legacy. That’s why financial advice can be particularly useful. If you’re likely to top the Inheritance Tax threshold it’s well worth talking to a financial adviser. More information about the proposed new additional nil rate band is available on our Inheritance tax planning support page.