Inheritance Tax – Walker Thompson

2024/25

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.
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 first 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.

IHT rates and nil rate band 2024/25 and 2023/24

IHT nil rate	£325,000
Lifetime rate	20%
Death rate	40%
Death rate if sufficient charitable legacies made	36%

IHT reliefs for lifetime gifts

Annual exemption	£3,000
Small gifts	£250
Marriage/civil partnership
– parent	£5,000
– grandparent	£2,500
– other spouse/civil partner	£2,500
– other	£1,000

IHT – 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

Disclaimer

This publication is published for the information of clients. It provides only an overview of the regulations in force at the date of publication and no action should be taken without consulting the detailed legislation or seeking professional advice. Therefore no responsibility for loss occasioned by any person acting or refraining from action as a result of the material contained in this publication can be accepted by the authors or the firm.