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Inheritance Tax

For further information on inheritance tax and the legalities surrounding it, contact the experts at Franklin Underwood.

2018/19 2017/18 2016/17
Nil rate band (NRB)* £325,000 £325,000 £325,000
NRB Residential enhancement (RNRB)†* £125,000 £100,000 N/A
Rate of tax above nil rate band** 40% 40% 40%
Lifetime transfers to most trusts 20% 20% 20%

† RNRB is available for transfers of a main residence to direct descendents. It tapers away at the rate of £1 for every £2 of estate value above £2m.

* Up to 100% of the proportion of a deceased spouse’s/civil partner’s unused NRB and RNRB band may be claimed to increment the current NRB and RNRB when the survivor dies.

** Rate reduced to 36% if at least 10% of the relevant estate is left to charity. Unlimited exemption for transfers between spouses/civil partners, except if UK domiciled transferor and foreign domiciled transferee, where maximum exemption £325,000.

100% Business Property Relief (BPR) for all shareholdings in qualifying unquoted trading companies, qualifying unincorporated trading businesses and certain farmland/buildings.

Reduced tax charge on gifts within 7 years before death

Years before death 0-3 3-4 4-5 5-6 6-7
% of full death tax charge payable 100 80 60 40 20

Annual exemptions for lifetime gifts include £3,000 per donor and £250 per recipient.