Inheritance Tax

Administrators/executors can calculate IHT themselves through the IHT400 (for information about IHT forms, click here). If the administrator/executor cannot work out or struggle to come to a conclusion on the IHT they can either ring the
IHT helpline on: 0300 123 1072.  If they wish to leave the calculations to HMRC, they can. 

Inheritance tax rule changes

In the 2015 Summer Budget, the Chancellor, George Osborne announced a new transferable main residence allowance, which will gradually increase from £100,000 in April 2017 to £175,000 per person by 2020/21.

This is in addition to the main nil-rate band. It will effectively raise the IHT-free allowance to £500,000 per person.

Where married couples jointly own a family home and want to leave this to their children, the total IHT exemption will be £1m.

Inheritance tax threshold and rates

If you are single and die during the tax year 2016-2017 with an estate worth more than £325,000 (including money, property and investments, but after deducting debts and expenses such as funeral costs).

40% tax will become due on anything above £325,000.
For example, if you leave behind an estate worth £500,000 the tax bill will be £70,000 (40% on £175,000 – the difference between £500,000 and £325,000)

However, if you are married or in a civil partnership, you may be able to leave more than this before paying tax.

Download our IHT Guide

Our Free Step-by-Step IHT Guide will take you through the entire IHT process.

Speak to a professional on 0800 1223 170 or arrange a free Call Back

Inheritance tax checklist

  • The main ways to avoid IHT are to spend your money while you are alive or give it away
  • Work out how much IHT might be due on your estate and regularly review it so you know what you're up against
  • Find out if the new rules apply to you
  • If you set up special wills to deal with IHT go back to the firm that set them up to see if they are still relevant
  • Make full use of any tax-free gifts you can make whilst you are alive
  • Put life insurance policies under trust
  • If there's going to be a big IHT bill, think about taking out an insurance policy under trust for your heirs to pay the bill
  • Make a will if you don't have one
  • Never take steps that might leave you struggling for money while you are alive in order to save tax after you've died
  • Remember - IHT is really someone else's problem, not yours