Inheritance tax thresholds refer to the amount of money that a person can transfer during his or her lifetime and still have passed on to the next generation tax-free. The inheritance tax threshold is the amount of money a person must receive in estate or inheritance taxes before any gifts are exempt.
When a person inherits money or assets from another person, that money and assets are considered part of that person's estate or inheritance. Even if the amount of money and assets the person inherits is below the tax threshold, the inherited items still count as part of their estate. The tax on this part of their estate is called an inheritance tax.
If a person inherits more money than they're allowed to keep without paying taxes on it, the government takes this extra money and puts it into a fund called the Fringe Benefit Exemptions (FBE) reserve. This reserve is used to help people who don't have much money too pay their taxes. The FBE reserve isn't counted as part of someone's estate when they die, so it doesn't go to their children.
The inheritance tax threshold is a legal limit on the amount of money that an individual can inherit from a deceased person. Some exceptions to the inheritance tax threshold exist, such as if an individual’s parents die with no children or if an individual inherits property that has been in their family for more than five generations.
When a person inherits money or property, the government can levy taxes on that property. The amount of tax depends on the value of the inheritance.