THERE are a range of taxes paid by people across the UK, covering everything from income to products bought and sold.

Inheritance Tax is among the most controversial of these taxes with many calling for it to be scrapped altogether.

If you're interested in learning more about Inheritance Tax, here is everything you need to know.

What is Inheritance Tax? Everything you need to know

According to the UK Government website, Inheritance Tax is a tax paid on the estate (property, money and possessions) of someone who has passed away.

However, most people do not pay this tax. Only those with estates valued at £325,000 and over will have to contribute.

This tax also applies to those who leave everything above the £325,000 threshold to their spouse, civil partner, a charity or a community amateur sports club.

If you're giving your home to your child, (including adopted, foster and/or stepchildren) or grandchildren, your threshold can increase to £500,000.

What are the rates for Inheritance Tax in the UK?

The standard inheritance tax rate is 40% with this only being charged on the part of the estate above the aforementioned threshold.

According to the UK Government, the estate can pay inheritance tax at a "reduced rate of 36% on some assets" if the relevant party leaves 10% or more of the "net value" to charity in their will (the net value is the estate’s total value minus any debts.)

 

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How many people pay Inheritance Tax in the UK?

Fewer than one in 20 estates (around 4%) are required to pay the tax, affecting about 27,800 estates every year.

However, many in the UK believe they are liable to pay the tax with a YouGov poll finding that a third of people think they will need to contribute upon their death.