Inheritance Tax can apply to an estate on death and to some lifetime transfers. The outcome depends on the assets, liabilities, gifts and reliefs involved.
Start with a clear record of ownership and previous gifts. A headline estate value alone does not show the tax due.
Allowances and exemptions
The nil-rate band may cover part of an estate. A residence nil-rate band can also apply where a qualifying home passes to qualifying descendants, subject to restrictions.
Transfers between spouses or civil partners and transfers to charity may qualify for exemption. Unused allowances from a deceased spouse or civil partner may be transferable, but the claim and evidence matter.
See our Inheritance Tax reference for the published bands and rates.
Lifetime gifts
Some gifts fall within exemptions; others remain relevant if the donor dies within the applicable period. Gifts to trusts may have a different treatment from gifts to individuals.
Keep dates, values, recipients and evidence supporting any exemption claimed. Regular gifts from income require more than simply describing a payment as affordable.
Giving away an asset while continuing to enjoy it can leave it within the estate for tax purposes. Related rules may also create an Income Tax issue.
Businesses, trusts and overseas assets
Business interests may qualify for relief, but ownership and activity conditions and current limits must be checked. Trusts and life policies need advice on both their terms and tax treatment.
Overseas assets require review under the current long-term UK residence rules, rather than the historical domicile assumptions.
Use the official Inheritance Tax guide when planning gifts or administering an estate. Consider payment obligations and liquidity alongside the eventual tax calculation.