Mon - Thu 8:30am – 5:00pm / Fri 8:30am – 3:00pm

Inheritance Tax (IHT)

  • 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.
  • For 2020/21, a further nil rate band of £175,000 (2019/20 – £150,000) 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 previous 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 2020/21 and 2019/20
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  
– parent £5,000
– grandparent £2,500
– bride/groom £2,500
– other £1,000
IHT – 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