Inheritance tax in Nigeria – many Nigerians does not really know what inheritance tax practically means and because of this they always pay it without much reaction to it financial weight and volume on their pockets.
Are you surprised? Just tag along with us for a while in this discussion and you will find out that we @financedropbox didn’t tell you guys any lie.
Through your own personal calculations, you will know how much you have paid so far.
We discussed Letter of administration in Nigeria and will writing in Nigeria earlier. We advise that you read for easier understanding here.
The following will form our major course out line here:
What is Inheritance tax in Nigeria?
This is the 10% value and worth paid as tax on an estate one inherited from a deceased person who died intestate.
From the above definition, one can now see why inheritance tax is referred to as both death tax and estate tax.
Inheritance is called Death tax in Nigeria because it is paid on an estate inherited from a deceased person.
It is equally called an Estate tax in Nigeria because it is a tax paid on an inherited estate. What made it an estate tax is not because the primary owner is deceased but because it is just an estate.
There are other estate taxes like the Federal estate tax. This federal estate tax is not charged on inheritance tax but rather, it can be can be charged on the gains of the estate like house rent on the estate and other fees the estate generates.
You can deduce the answer on what is the difference between inheritance and estate tax from the above line.
You can equally see the difference between Inheritance tax, Death tax and estate tax here. Before we go further on this, it is important that you know this….
Inheritance tax threshold
This is the minimum estate value benchmark set by the national or state tax laws at which inheritance tax does not apply.
It means that once the worth of an estate is not up to a certain value, Inheritance tax threshold; Inheritance tax on property will not be charged on such estate.
This is also referred to as nil rate band or Inheritance tax allowance
When to pay Inheritance tax in Nigeria
Inheritance tax payment defer from one country to another.
In London, it is paid 6 months from the time the deceased passed on but in Nigeria, it paid during probate process.
There are times it is not paid at all. This is the case when the transition of on estate from the deceased to the beneficiary is perfected without probate and without a will.
When someone dies intestate, the family members often go for the person’s properties and assets through the probate court.
In this process, they will execute letters of administration in Nigeria of which one of its processes is that the estates of the deceased person under consideration must be examined and evaluated to ascertain its economic worth.
This is done by state or contracted estate valuers.
Once this is done, then 10% of the valued worth will the applied to the valued sum immediately. The above is also a response on how do you calculate inheritance tax?
How do you beat inheritance tax in Nigeria?
IHT can be beaten in Nigeria but you must know how.
Find below the ways one can beat IHT in Nigeria:
- You must maintain estate value below nil rate band
- You must write a will
- You must hand over your estate to your close relative in your will like your living spouse and your children.
- Secure the service of a Trust in your estate management.
These are few out of many ways one can secure avoid the payment of IHT in Nigeria.
Inheritance tax refund
There are times the following are observed in the course of inheritance tax review and payments:
- Estates are overvalued by the person, persons or office that valued it.
- The valuation of estate is falsified and made to be unnecessarily high.
In some cases the inheritance tax has already been paid before it is discovered.
In this case the owner of the estate will apply for a refund of the excess paid in this regard.
The process is very simple.
Inheritance tax in Nigeria is a dynamic issue that requires mature approach for its implantation and manipulations.
Through effective Inheritance tax planning always get it right always.
FinanceDropbox is the brain child of Okekeobi Chisom Ferdinand, a seasoned Banker. He holds in his treasure box a whopping 13 years of Banking experience from which you are being furnished with the very best of financial information and blogs.
You’re free to bug me with your financial info worries.
Be assured of my unalloyed availability anytime you need me.
Okekeobi Chisom Ferdinand