Question about UK inheritance tax!?

Question

To solve an office query here, does the inheritance tax ceiling of £300k apply to the value of the 'estate' or to how much an individual receives? For example, if my estate were worth £400k and split between my son and daughter, would they be liable for the tax?

Answer 1

Inheritance tax is paid by the estate not the beneficiaries.

A £400,000 estate would pay £40,000 IHT (400,000-300,000 @ 40%) leaving a net estate of £360,000.

Each child would then receive £180,000.

Of course, in this case they are effectively paying the tax as it reduces their inheritance but the calculation is done at the estate level by the executor.