Cheshire IFA — Acumen Investment Partnership. Independent financial advice on investments, tax, pensions and assurance.

Basic Inheritance Tax Calculator

Purpose of calculator.

This calculator is designed to help people find out whether or not they may have an IHT problem. It should be placed in context as a very rough guide, NOT an actual IHT calculator.

You may use whichever of the notes you see fit, or rewrite them in your own style. We do however consider that for the calculator to be compliant on your web site their content should be easily accessible to the reader, though they could be set inside Alerts, or Pop Up Notes window etc.

Calculator notes

Nil Rate Band of 275K.
Tax rate of 40%.
Valid for year 2005-6

Total value of all homes(1)
Current value of investments(2)
Value of art, antiques, collectibles etc.
Value of life insurance (3)
Total of all outstanding debts NOT covered by life insurance
Value of Loans owed TO you (4)
Business Assets(5)
The value you expect to realise from the business

Results
Total Value of the Estate
Inheritance tax liability

CALCULATOR NOTES

(1) - Main residence and additional homes.

(2) - Stocks, Shares, Deposits, National Savings etc. Includes investment property, whether or not rented out.

(3) - Ignore Life Insurance linked to a mortgage. Other life insurance may actually be outside of your estate and thus not count for Inheritance Tax purposes. If it isn't, we can probably adjust it so that it doesn't count for IHT. We need to see the documents to assess this.

(4) - If you have lent significant sums of money then this debt owed to you is an asset of your estate, and could create a tax liability. If you do not really expect repayment, (especially if it is a family matter), then consider turning the debt into a gift so that the money is removed from your estate.

(5) - This calculator IGNORES Business Property Relief. It takes the view that you will have sold the business, (or passed it to children),and retired long before any IHT liability arises. Therefore in this section put in the value that you expect to retain to ease your retirement. EG you have a business worth £500,000 but expect to pass it to your children as a £200,000 sale and £300,000 gift. Put £200,000 in the box.

These calculators are offered for simple guidance. To obtain a more accurate appraisal of your position, please contact us.