Upon the time of a person’s death there is in the United Kingdom a 40% on your taxable assets. This is called Inheritance Tax (IHT). The nil rate band (NRB - also known as IHT) threshold is the amount up to which an estate has no IHT to pay. Each person’s estate can benefit from the NRB.

Each individual has their own NRB which is currently set at £325,000. Any part of the estate up to the NRB threshold is chargeable to IHT at a rate of 0%. Any part of the estate that exceeds the NRB threshold is usually charged to IHT on death at 40%.

To the Muslims, this is important as the Will (Wasiyat) distributes in fixed shares and so does not allow Muslims to benefit fully from the advantages of this tax. It would mean that then estate would need to pay a lot more in tax than if they had a ‘normal’ will with everything passing on to the spouse. An Islamic Will (Wasiyat) can provide more tax advantages through a life interest.

Therefore, it is important that you know fully how the UK inheritance laws work and what exemptions and reliefs are available to you.

For this reason we at Al-Samad Wills are here to offer you the best advice on how to ensure that impact of the IHT is reduced.