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J R Watson & Co Accountants

Northampton: 01604 630745 Rugby: 01788 575037 Email us

Inheritance tax

Inheritance tax rates and allowances.

  1. Resources
  2. Tax rates & 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 2020/21, a further nil rate band of £175,000 (2019/20 - £150,000) 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
Bride/groom 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
Capital allowances Capital gains tax Child benefit Corporation tax Income tax Individual Savings Account (ISA) Inheritance tax Minimum wage National insurance Pensions Stamp duty & land taxes Statutory pay Tax reliefs for individuals Value added tax Vehicles

The latest news

06 Jan 2021

Chancellor announces £4.6 billion lockdown grant package

Chancellor Rishi Sunak has announced a new £4.6 billion package of grants to support businesses through the latest national lockdown.

06 Jan 2021

Extension of the Job Retention Scheme

Chancellor Rishi Sunak has extended the Coronavirus Job Retention Scheme (CJRS) until the end of April 2021.

06 Jan 2021

VAT deferral

HMRC has issued some guidance to taxpayers that deferred their VAT payments between 20 March and 30 June 2020 and still have payments to make.

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Northampton Office: Eastgate House, 11 Cheyne Walk, Northampton, Northamptonshire NN1 5PT

Rugby Office: Sir Frank Whittle Business Centre, Great Central Way, Rugby, Warwickshire CV21 3XH


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