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.
IHT rates and nil rate band 2023/24 and 2022/23
IHT nil rate
£325,000
Lifetime rate
20%
Death rate
40%
Death rate if sufficient charitable legacies made
36%
IHT reliefs for lifetime gifts
Annual exemption
£3,000
Small gifts
£250
Marriage/civil partnership
- parent
£5,000
- grandparent
£2,500
- other spouse/civil partner
£2,500
- other
£1,000
IHT - reduced charge on gifts within seven years of death
