Inheritance tax

IHT may be payable when an individual's estate is worth more than the IHT nil rate band when they die.

Lifetime and death transfers between UK domiciled spouses are exempt from IHT.

A further nil rate band of £175,000 may be available in relation to current or former residences.

The IHT threshold available on death may be increased for surviving spouses as there may have been a nil rate band not used, or not fully used, on the first death.

There are reliefs for some business and farming assets which reduce their value for IHT purposes.

IHT may also be payable on gifts made in an individual's lifetime but within seven years of death.

Some lifetime gifts are exempt.

Transfers of assets into trust made in an individual's lifetime may be subject to an immediate charge but at lifetime rates.

There are also charges on some trusts.

Threshold

Standard nil rate band: £325,000

Rates

Rate	%
Lifetime rate	20
Death rate	40
Death rate if sufficient charitable legacies made	36

Reliefs for lifetime gifts

Annual Exemption: £3,000

Small Gifts: £250

Marriage/civil partnership: The amount of relief depends on who the gift is from...

Gift from	Amount (£)
Parent	5,000
Grandparent	2,500
Other spouse/civil partner	2,500
Other	1,000

Reduced charge on gifts within seven years of death

Years before death	% of death charge
0-3	100
3-4	80
4-5	60
5-6	40
6-7	20

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