Prince Philip’s £10m estate could be passed to Queen with Inheritance Tax exemption under married couples’ rule

The Queen may face an Inheritance Tax exemption on the Duke of Edinburgh’s estate if he has left his entire estate to the monarch.

Married couples can pass their estate to their spouse with an Inheritance tax exemption when they die. This means they can avoid a 40% tax above a £325,000 threshold. 

An obscure legal clause also allows inheritance to pass from “sovereign to sovereign” or the consort to a reigning monarch. This means that the Queen could pass it on to Prince Charles when she dies with another Inheritance Tax exemption. 

The Royal Family could potentially be hit with having to pay millions to the taxman if the Duke leaves a bequest to other family members. However, there would no inheritance tax bill if he left everything to one of the hundreds of charities he supported. 

Official Government tax advice says there is normally nothing to pay “if you leave everything above the threshold to your spouse, civil partner, a charity or a community amateur sports club”. 

Giving smaller amounts over 10% of the estate to charity attracts a tax rate of 36 percent on some assets. 

Inheritance Tax Rules

In England and Wales, if an Estate is worth more than £325,000 when a person dies, then they typically have to pay Inheritance Tax. Currently, the Inheritance Tax rate is 40% on anything above the threshold. If a person leaves more than 10% of the estate’s value to charity, then the rate may reduce to 36%.

If inheritance tax is payable

The grant of representation will not usually be issued until the inheritance tax (IHT) has been paid to HMRC. This can potentially cause a delay in the administration of the estate.

You will normally be expected to pay 10% of the tax due on the value of property and shares. You also have to pay all of the tax due in respect of the rest of the estate. This tax payment should be made within six months of death. The rest is payable in yearly instalments over a ten-year period, or as soon as they are sold. Interest will start to accrue on any outstanding inheritance tax after six months from the date of death.

If there are further assets in the estate, or the value has not been correctly stated, you may have to give HMRC a corrective account and pay any additional tax.

How we can help

Here at The Inheritance Experts we work with solicitors who have years of experience dealing with all manner of inheritance claims. This includes Inheritance Tax matters. Contact us today by filling in our contact form. Or call us on 01614138763 to speak to one of our friendly knowledgeable advisors.

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