Rates and thresholds
| From | 2016/17 | 2015/16 |
|---|---|---|
| Nil rate band | £325,000 | £325,000 |
| Tax paid on legacies on death | 40% | 40% |
| Tax paid if at least 10% of net estate is left to charity on death |
36% | 36% |
| Gifts made up to seven years before death (see lifetime gifts) |
40% | 40% |
| Lifetime transfers to most trusts (note 5) | 20% | 20% |
Notes
- Up to 100% of the proportion of a deceased spouse's/civil partner's unused nil rate band may be claimed to increment the current nil rate band when the survivor dies.
- Gifts or legacies to charities are not charged to IHT.
- If the donor pays the IHT due on a lifetime gift the effective rate is 25%.
- IHT due on a deceased's estate and on gifts within seven years of death is generally due six months after the month of death, but in practice it must be paid before probate is granted.
- IHT on chargeable lifetime transfers to trusts is payable on the later of six months after the month of transfer, or 30 April in the next tax year.
Lifetime gifts
| Reduced tax charge on gifts up to seven years before death | |||||
|---|---|---|---|---|---|
| Years before death | 0-3 | 3-4 | 4-5 | 5-6 | 6-7 |
| Percentage of IHT death charge payable |
100% | 80% | 60% | 40% | 20% |
Note
Lifetime gifts between individuals ('potentially exempt transfers') are only charged to IHT if the donor dies within seven years of the gift.
Exempt gifts
| Amount of relief | Conditions |
|---|---|
| £3,000 per tax year | Amount per donor; unused exemption can can be carried forward one year |
| £250 per tax year | De minimis amount per recipient |
| Unlimited | Regular gifts out of surplus income |
| Unlimited | To UK domiciled spouse or civil partner |
| £325,000 | To non-domiciled spouse/civil partner |
| £5,000 | From parent of party to marriage (see note) |
| £2,500 | From party to marriage or from remoter ancestor (see note) |
| £1,000 | From any other person (see note) |
Note
Must be made to one or both parties to a marriage in consideration of that marriage. These rules apply equally to those entering a civil partnership.
Business and agricultural property
| Amount of relief | Property and conditions |
|---|---|
| 100% | All shareholdings in unquoted trading companies, an unincorporated business or interest in such a business |
| 50% | Controlling shareholding in quoted company, land and buildings used by transferor's company or partnership |
| 100% | Agricultural value of qualifying farmland and buildings |
Note
In all cases the property must have been owned for at least two years, and other conditions apply.