Tax Testimonials FAQ
"had it not
been for
you we
might well
have not
known
about the inheritance."
LT, Shrewsbury, Shrops
INHERITANCE TAX
Current Nil Rate Band
The inheritance tax (IHT) allowance since 06.04.2009 is £325,000 but there is an allowance for married couples / civil partners, explained below.
Please click here to see details of HM Revenue & Customs nil rate bands since 18.03.1986.
Married Couples / Civil Partners Allowance
In the case of deaths occurring since the 9th October 2007, it is possible for the estate of a widow(er) to take advantage of any unused element of the inheritance tax allowance of the estate of their deceased spouse.
If the first spouse dies leaving all the estate to the spouse, then 100 per cent of the inheritance tax allowance can be used when the spouse dies (at the nil rate band applicable at that time). For example, if the first spouse died when the nil rate band was £300,000 and the survivor dies when the nil rate band is £400,000, then a total nil rate band exemption of £800,000 can be claimed on the second death:
Partner 1 dies: IHT nil rate band = £300,000
Partner 2 dies: IHT nil rate band = £400,000
Therefore IHT allowance = £800,000
Inheritance tax is charged on £100,000 (£900,000 - £800,000)
(The estate of the second partner is entitled to £400,000 + another 100% of current allowance due to Partner 1's unused allowance = £800,000)
Estate of Partner 2 = £900,000
Inheritance tax is charged on £100,000 (£900,000 - £800,000)
This is a very simplified explanation of the regulations, and so detailed legal advice should be taken.