Call us now: 0121-550-8525
Email: This email address is being protected from spambots. You need JavaScript enabled to view it.
3 Lyttleton Court, Birmingham Street, Halesowen, Birmingham, B63 3HN

Inheritance Tax

 

Rates

The nil rate band for cumulative chargeable transfers in the last seven years is £325,000 (unchanged since 6 April 2009). If one of a married couple/civil partnership did not use the full band on death, the unused proportion increases the nil band of the other spouse/partner.

Gifts above that are charged at the following rates:

Chargeable legacies on death - 40%

Gifts within 7 years of death - 40%, with reductions if over 3 years before death

Lifetime chargeable gifts - 20% if the donee pays the tax, 25% if the donor pays

Payment

Inheritance Tax (IHT) on a deceased’s estate and on gifts within 7 years of death is generally payable at the end of six months after the month of death, but tax on the estate must be paid before probate is granted, and this may necessitate earlier settlement.

IHT on chargeable lifetime gifts is payable on the later of six months after the month of transfer or 30 April in the next tax year.

Major reliefs

Lifetime gifts between individuals are left out of account while the donor survives (‘potentially exempt transfers’). They are only charged if the donor dies within 7 years of the gift.

The following transfers are exempt from IHT:

  • the first £3,000 gifted in a tax year (unused limit may be carried forward for one year)

  • small gifts of up to £250 per recipient in a year

  • normal expenditure out of income

  • gifts between husband and wife, unless the donor is domiciled in the UK and the recipient is not

  • gifts in consideration of marriage – £5,000 from a parent, £2,500 from a grandparent or a party to the marriage, £1,000 from others

Most business and agricultural property enjoys a 100% relief once it has been owned for two years, although some types of property are relieved only at 50%, and it is important to meet all the conditions.

Relief for gifts to charity

Gifts or legacies to charity are not charged to IHT. In addition, where 10% of the net value of an individual’s death estate is left to charity, the IHT rate on the rest is reduced from 40% to 36%.

AddThis Social Bookmark Button
icaewlogo  Chartered Tax Advisers2bacslogo certifiedquickbookslogo fsblogo sagelogo

Directors:  Paul Cutter FCA | Kate Jones FCCA, ACA | Dave Hazlehurst FCCA, CTA

Registered Office:

3 Lyttleton Court | Birmingham Street | Halesowen | West Midlands | B63 3HN

Site Map | Client Portal Login

A Member firm of the institute of Chartered Accountants in England and Wales

Registered with The Chartered Institute of Taxation as a firm of Chartered Tax Advisers

 Company Number: 07252989

Terms Of Use | Privacy & Cookie Policy