Estates—inheritance tax

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Introduction to IHT

For a quick guide to the basics of the inheritance tax (IHT) regime and a broad overview of UK tax rates, exemptions, basic nil rate band (NRB), residence nil rate band (RNRB), transferable NRB and RNRB, agricultural property relief (APR), business property relief (BPR), the reduced 36% tax rate for estates which include at least 10% gifts to charity, the territorial scope of IHT domicile (general, deemed and elected), restrictions on deducting loans and debt, lifetime gifts, small gifts relief, the use of trusts and compliance procedures, see Practice Note: Introductory guide to IHT.

See also Practice Note: Case study—IHT calculation on death.

The charge on death

The IHT charge on death falls under two headings:

  1. •

    the additional charge—which arises on the chargeable lifetime transfers and the potentially exempt transfers (PETs) made in the seven years before death, and

  2. •

    the estate charge—which arises on the value of all the property the deceased owns (or is deemed to own) immediately before death

The calculation and apportionment of IHT due on death can be complex, especially taking account of trust interests, chargeable

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Latest Private Client News

MoJ publishes factsheet on applying for payment out of a fund following the death of a Court of Protection client

The Ministry of Justice has published a new factsheet (CFO 401) detailing the process of applying for payment out of a fund held by the Court Funds Office following the death of a Court of Protection client. The framework, which applies to England and Wales, outlines the specific form to be completed, the necessary supporting documentation, and the procedure for applying for payment of inheritance tax and funeral expenses.

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Private Client weekly highlights—19 December 2024

This week’s edition of Private Client highlights includes: (1) HMRC updates form IHT100f; (2) Knight v Barnsley, which held that the Court of Protection did have jurisdiction to determine a dispute over a claimant’s deputy’s release from reverse indemnity undertakings; (3) Manolete Partners Plc v White, in which the Court of Appeal held that occupation pension benefits are generally inalienable; (4) Hannah v Revenue and Customs Commissioners, where the First Tier Tribunal (Tax) permitted the amendment of grounds of appeal to include ground that the transfer of assets abroad regime is incompatible with EU law; (5) Hirachand v Hirachand, a decision of the Supreme Court which makes it clear that success fees cannot be included in awards for financial provision under the Inheritance (Provision for Family and Dependants) Act 1975; and (6) the Chancellor has confirmed that the Spring Forecast will take place on 26 March 2025.

Question of the week: Does the inheritance tax exemption for transfers between spouses apply where both spouses are non-UK domiciled and make a transfer of UK situs assets between them?

This Q&A considers the exemption from inheritance tax on a transfer between spouses who both have non-UK domicile status.

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