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.
Each year the government sets an inheritance tax threshold, called the nil rate band. If your estate is worth less than this, it may not be subject to inheritance tax. The nil rate band is set at £325,000 per person, fixed at £325,000 until April 6, 2021. 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 Inheritance Tax: residence nil rate band (RNRB)
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.