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Inheritance tax

Inheritance tax rates and allowances.

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 2021/22, 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 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.

Threshold

Standard nil rate band: £325,000

Rates

Rate %
Lifetime rate 20
Death rate 40
Death rate if sufficient charitable legacies made 36

Reliefs for lifetime gifts

Annual Exemption: £3,000

Small Gifts: £250

Marriage: The amount of relief depends on who the gift is from...

Gift from Amount (£)
Parent 5,000
Grandparent 2,500
Other 1,000

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
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Clay Shaw Butler, 24 Lammas Street, Carmarthen, Carmarthenshire SA31 3AL

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Clay Shaw Butler is the trading name of Clay Shaw Butler Limited.
Registered in England and Wales. Company No. 6519528. Registered to carry on audit work in the UK and Ireland and regulated for a range of investment business activities by the Institute of Chartered Accountants in England and Wales.
Details about our audit registration can be viewed at www.auditregister.org.uk under reference C001742711.
The registered office address is 24 Lammas Street, Carmarthen, Carmarthenshire SA31 3AL.