Inheritance Tax

Inheritance tax is charged on the value of a deceased person’s estate above the tax free limit of £325,000.00.

Inheritance Tax

The rate of tax is 40% on all estate above the tax free limit so on an estate of £500,000.00 your family could face a tax bill of £70,000.00. Fortunately there are a number of measures available to help to reduce or eliminate entirely the eventual tax bill and our Solicitors will be happy to discuss these with you.

The main exemptions and reliefs are as follows:

The Spouse Exemption

Gifts between husband and wife are normally exempt from IHT.

The Charity Exemption

Gifts to registered charities are exempt from IHT.

Business Property Relief

This relief covers various interests in a business including (subject to certain conditions):

shares in an unquoted company – here the relief is 100%
shares in a quoted company which carry control of the company - here the relief is 50%

Lifetime Gifts

Most lifetime gifts are exempt from IHT provided that
the donor lives for at least seven years thereafter and
does not reserve any benefit in the gifted asset.

The annual IHT exemption

Gifts of up to £3,000 in each tax year are exempt and any exemption not used in one tax year can be carried forward to the next.

Marriage Gifts

Gifts in consideration of marriage are exempt, as follows:

by a parent of the bride or groom - £5,000
by a grandparent of the bride or groom - £2,500
by any other donor - £1,000

Small gifts

Small gifts of up to £250 to any number of people are exempt, provided that the total of gifts per donor to each individual does not exceed £250 in the tax year.

Normal gifts from income

Lifetime gifts made regularly out of income each year are exempt, provided they do not affect the donor’s usual standard of living

For further information, please contact David Maxwell on +44 (0) 20 7725 8079 or click here to email David Maxwell directly.