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Inheritance Tax

Rates and thresholds

From 2015/16 2014/15
Nil rate band £325,000 £325,000
Tax paid on legacies on death 40% 40%
Tax paid if at least 10% of net estate
is left to charity on death
36% 36%
Gifts made up to seven years before
death (see lifetime gifts)
40% 40%
Lifetime transfers to most trusts (note 5) 20% 20%


  1. The unused nil rate band is passed to the survivor of a married couple/civil partnership when the first spouse dies.
  2. Gifts or legacies to charities are not charged to IHT.
  3. If the donor pays the IHT due on a lifetime gift the effective rate is 25%.
  4. IHT due on a deceased's estate and on gifts within seven years of death is generally due six months after the month of death, but in practice it must be paid before probate is granted.
  5. IHT on chargeable lifetime transfers to trusts is payable on the later of six months after the month of transfer, or 30 April in the next tax year.

Lifetime gifts

Reduced tax charge on gifts up to seven years before death
Years before death 0 - 3 3 - 4 4 - 5 5 - 6 6 - 7
Percentage of IHT
death charge payable
100% 80% 60% 40% 20%


Lifetime gifts between individuals ('potentially exempt transfers') are only charged to IHT if the donor dies within seven years of the gift.

Exempt gifts

Amount of relief Conditions
£3,000 per tax year Unused gift relief can be carried forward one year
£250 per tax year To each person
Unlimited Regular gifts out of surplus income
Unlimited To UK domiciled spouse or civil partner
£325,000 To non-domiciled spouse/civil partner
£5,000 From parent of party to marriage (see note)
£2,500 From party to marriage or from remoter ancestor (see note)
£1,000 From any other person (see note)


Must be made to one or both parties to a marriage in consideration of that marriage.

Business and agricultural property

Amount of relief Property and conditions
100% All shareholdings in unquoted trading companies, an unincorporated business or interest in such a business
50% Controlling shareholding in quoted company, land and buildings used by transferor's company or partnership
100% Agricultural value of qualifying farmland and buildings
50% Land without vacant possession or right to obtain it within 12 months


In all cases the property must have been owned for at least two years, and other conditions apply.