Inheritance tax (IHT) is a tax on bequests, gifts and other transfers of property by individuals, either during their lifetime or on their death. It can also be charged on property held in a trust, or owned by a closed company.
The exact tax amount is determined by the nature of the transfer, the relationship between the parties, and the circumstances of the individual, trust or company making the transfer.
People resident in the UK will be subject to IHT on any chargeable transfers, regardless of whether the property transferred is located in the UK or overseas. Non-UK residents are only subject to inheritance tax on property located in the UK.
Transfers during lifetime or upon death
Individuals may make transfers during their lifetime and are deemed to make a transfer of all their estate on death.
Any transfers made during your lifetime will be exempt from IHT as long as you live beyond seven years after the gift – these are considered ‘Potentially Exempt Transfers’. If you die within seven years of the gift and the value of the transfer exceeds the IHT threshold, then it will not be exempt and inheritance tax will be due.
Transfers upon death arise in relation to the property in the estate of the deceased. If an individual asset transfer is more than the threshold of £325,000, the excess will be taxed at 40%.
We can help you with:
- Organising gifts and bequeathments
- Setting up of trusts
- Liaising with HMRC on your behalf
- Recommending insurance to cover IHT on transfers after an untimely death