Relief/exemption

Amount

Notes

Useful links

Statutory ref

Last updated

Author

Nil rate band

£325,000 (after any allowances/exemptions)

Transferable between spouses and civil partners.  Unchanged at £325,000 since 6th April 2009.

HMRC inheritance tax manual

IHT400 Rates and tables

Spouse/civil partner exemption

100% exemption

Combined with the "Nil Rate Band" the effect can be to increase the effective nil rate to £650,000 on death of a surviving partner if the first to die leaves sufficient assets to the survivor

HMRC inheritance tax manual IHTM11031

Finance Act 2008 sch 4 (inserting new s.8A into Inheritance Act 1984)

1st November 2018

HJS

Residence Nil Rate Band (also known as "Family home allowance")

£125,000 (reducing by £1 for every £2 by which estate exceeds £2m)

started at £100,000,   increasing by £25,000 each year until max of £175,000 is reached.

CoffinMew webpage "What is the Residence Nil Rate Band (RNRB)?"
and
HMRC inheritance tax manual IHTM46023

Finance (No 2) Act 2015 s.9 (inserting new provisions into Inheritance Act 1984)

1st November 2018

HJS

Bequests to charity

100% exemption

The charity need not be a UK charity (see Hein Persche v Finanzamt Ludenscheid ECJ C-318/07 (27 January 2009)

HMRC inheritance tax manual IHTM11101
and
IHTM11112

Inheritance Act 1984 s.23

1st November 2018

HJS

Reduced rate  (where at least 10% of net estate is left to charity)

36%

Inheritance tax is reduced from 40% to 36%  on part of estate not left to charity.

Ross Martin notes on "IHT releif:10% discount for charitable bequests"
and
HMRC inheritance tax manual IHTM45001

Inheritance Tax Act 1984 sch 1A

Agricultural land and buildings

100% exemption

iif the land is let, the full 100% exemption still applies provided the letting is for 12 months or more and began after 1st Sept 1995.  In other cases the exemption is reduced to 50%.

HMRC inheritance tax manual IHTM24000

Forestry

up to 100% exemption

There is a specific IHT relief for woodland owned for 5 + years.  If this is not available Business assets exemption or Agricultural Property exemption may apply. ‘Woodland’ includes the underlying land as well as trees growing on it.

Gov't notes:  Inheritance Tax on Woodlands
and
HMRC inheritance tax manual

Inheritance Act 1984 chapter 3

Business assets

100% exemption

generally includes shares in unquoted companies. The exemption is reduced to 50% in many cases where the deceased had a controlling interest in the business.

HMRC inheritance tax manual IHTM25000

Taper relief

20% to 100% of the  tax due

Applies where a gift was made more than 3 years before the donor's death. Starts at 20% and goes up by 20% for each year (so that after 7 years the relief is 100%).

HMRC inheritance tax manual

Inheritance Tax Act 1984 s.7(4)

Lifetime transfers into a trust

20%

Increased to 40% if the settlor dies within 7 years of the transfer.

Gov't notes on Trusts and Inheritance Tax
and
HMRC inheritance tax manual IHTM16000

Annual gifts per donor

£3000

HMRC inheritance tax manual

Small gifts per donee

£250

HMRC inheritance tax manual

marriage gift by parent

£5000

HMRC inheritance tax manual

marriage gift by grandparent

£2500

HMRC inheritance tax manual

marriage gifts by persons other than parents/grandparents

£1000

HMRC inheritance tax manual

regular gifts out of income

100% exemption

HMRC inheritance tax manual

Limit per tax year re certain payments from s.89 "trusts for disabled persons"

£3,000 or 3%of the max value of the trust fund which ever is the less

A main benefit of a s.89 "vulnerable beneficiary" trust is exemption from the 10 yearly tax generally payable by trusts. This and other "s.89 tax benefits" are  available even if limited amounts are paid to non-vulnerable beneficiaries (the limits noted here  apply to  trusts set up after 7th April 2013).

Gov't notes on Trusts for vulnerable people
and
Lexis PSL notes on "Trusts for the Disabled"
and
HMRC inheritance tax manual

Inheritance Tax Act 1984 s.89(3A) and (3B)

6th April 2018

HJS

Armed forces and similar

generally 100% exemption if death is related to active service

different rules apply if the death happened before 19th March 2014

HMRC inheritance tax manual IHTM11301

Inheritance Tax Act 1984 ss.153 to 155(A)

31st October 2018

HJS

Heritage property

generally  postponement of inheritance tax (ie  "conditional  exemption")

As a general rule in England  public access must be available on one day a week plus public holidays during spring and summer, being at least 28 days in total (see HMRC memo "Capital Taxation and the National Heritage", 2017).

Boodle Hatfield notes "What price conditional exemption"
and
HMRC inheritance tax manual IHTM11014

Inheritance Tax Act 1984 ss.30-35
and

Finance Act 2012 s.14

31st October 2018

HJS