A breif overview of current Inheritance Tax rules

1. Welcome to
Inheritance Tax Overview
by Matthew Wildeman

2. Inheritance Tax (IHT) some figures
20,000 estates were liable for IHT in 2011/12*
An increase of 3,000 on the previous year*
HMRC received over £2,800 million in IHT in 2011/12*
Estimated 42,000 estates will be liable by 2016-17 **
* HMRC National Statistics July 2012
** Telegraph Dec 2013

3. Current Inheritance Tax Rules (IHT) Highlights
IHT is a tax liable on your death of all your personal assets worldwide (for UK
domiciles)
Everyone has an “allowance” charged at 0% called the Nil Rate Band (NRB)
Current rate NRB is £325,000 frozen till 2019
Everything over the NRB is charged at 40%
Any liable assets passed between spouses or civil partners is exempt from
IHT, called the Spousal Exemption
From Oct 2007 married couples or those in a registered civil partnership can
transfer any unused portion of the NRB to the surviving partner or
spouse, called the Transferable Nil Rate Band

4. Current Inheritance Tax Rules (IHT) Highlights
Everyone has a number of exemptions and allowances that they can use:
Everyone can give away gifts worth up to £3000 annually
Parents can give £5000 as a wedding gift or grandparents £2500 free of IHT
Any regular gifts made out of income, provided it leaves enough to maintain
your lifestyle, is exempt from IHT
Any gift to a “qualifying” charity, whether during your lifetime or on death, is
exempt from IHT
If you leave 10% of your “net value” of your estate to a “qualifying” charity you
can apply for a reduced IHT rate of 36% on some or all of your IHT liable estate

5. Current Inheritance Tax Rules (IHT) Highlights
Potentially Exempt Transfers (PETs) and the 7 Year Rule
Any gift you make to individuals will be IHT exempt as long as you live 7 years after the gift, a
Potentially Exempt Transfer. NB. Provided you haven’t retained an interested in the
gift, otherwise it would be a Gift with Reservation of Benefit (GROB)
If you should die within 7 years of making the gift there is a sliding scale from 3 years onwards
for the amount IHT relief. 3-4yrs – 20%, 4-5yrs – 40%, 5-6yrs – 60%, 6-7yrs – 80%

6. Any Questions?
Contact me via
Email: mwildeman@talkwillsandtrusts.co.uk
Office Tel: 01202 759 999
Mobile Tel: 07557 982 702