Inheritance tax glossary… the basics

Assets Generally, everything that you own.
Beneficiary A person, or organisation, to whom you leave a gift in your will.

Estate The total sum of your possessions, including property and money, left at your death once any debts have been paid.

Inheritance tax (IHT) The 40 per cent tax paid on an estate that is over the nil-rate band threshold. The current 2009/10 threshold is £325,000 for an individual. Married couples or those in a civil partnership have a combined threshold of £650,000.

Intestate The term for someone dying without having a Will in place. In this case the Rules of Intestacy will decide to whom your estate is passed.

Nil rate band The amount of your estate on which IHT is not payable. For the tax year 2009/10 this is £325,000, and for married couples or those in a civil partnership £650,000.

Potentially exempt transfer A gift made during one’s lifetime that is exempt from IHT should the donor live for 7 years after making the gift.

Trust An arrangement you can make in your will to administer part of your assets after your death.
Will A form of instruction as to how someone wishes to dispose of their assets on death.

Tax benefits may vary as a result of statutory change and their value will depend on individual circumstances. Thresholds, percentage rates and tax legislation may change in subsequent finance acts.