Inheritance tax

Inheritance tax rates

Inheritance Tax is relevant where an individual makes a gift resulting in a fall in value of their estate.

Depending on the type of gift, lifetime tax (currently 20%) may be payable by either the person making the gift or the person receiving it.

For some gifts, tax is not payable unless the donor dies within seven years of making the gift.

If inheritance tax becomes payable there are annual exemptions and various reliefs that may be available to set against any chargeable gifts.

Nil rate bandup to £325,000up to £325,000
Chargeable at 40%*above £325,000above £325,000
* A lower rate of 36% applies where 10% or more of a deceased person's net estate is left to charity.

Inheritance tax relief

The following inheritance tax taper relief is available.

Time from gift to deathReduction in tax payable on PET
3 to 4 years20%
4 to 5 years40%
5 to 6 years60%
7 years or over80%

Digita - Thomson Reuters
Digita - Thomson Reuters