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Inheritance tax is paid if a person’s estate is worth more than £325,000 when they die.

An estate is exempt from IHT if the deceased left everything to their husband, wife or civil partner. Married couples and civil partners can give any value of gifts to each other during their lifetime without IHT being due on them. If someone’s estate is less than the IHT threshold of £325,000, the remaining threshold can be transferred to their husband, wife or civil partner’s estate when they die. This means the surviving partner’s estate can be worth up to £650,000 before any IHT is due. IHT may also be payable on gifts made in an individual's lifetime but within 7 years of death. Transfers of assets into trust made in an individual's lifetime may be subject to an immediate charge at lifetime rates.

Inheritance tax rule changes - In the 2015 Budget, the Chancellor, George Osborne announced a new transferable main residence allowance, which will gradually increase from £100,000 in April 2017 to £175,000 per person by 2020/21. This is in addition to the main nil-rate band. It will effectively raise the IHT-free allowance to £500,000 per person. Where married couples jointly own a family home and want to leave this to their children or grandchildren, the total IHT exemption will be £1m.

  • IHT Rates & Allowances:

    Standard nil rate band £325,000
    Annual Exemption £3,000
    Small Gifts £250
    Normal expenditure out of income
    Rates of Inheritance tax
    %
    Lifetime rate 20
    Death rate 40
    Death rate if >10% charitable legacies made 36
    IHT may also be payable on gifts made in an individual's
    lifetime but within seven years of death.
    Years before death Tax you pay
    0-3 40%
    3-4 32%
    4-5 24%
    5-6 16%
    6-7 8%
    There’s no IHT on a wedding gift worth up to:
    Gift from Amount (£)
    Parent 5,000
    Grandparent 2,500
    Bride/groom 2,500
    Other 1,000

Business Relief - allows a business to be passed on by reducing the IHT on it by up to 100%.

Agricultural Relief - allows a working farm to be passed on without paying IHT on it.

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Registered office: 61 Friar Gate, Derby, Derbyshire, DE1 1DJ

Adrian Mooy & Co is the trading name of Adrian Mooy & Co Ltd.  Registered in England No. 05770414

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