1. Spouse exemption of a full 100% on the first death if one spouse dies passing the estate in full to the surviving (UK domiciled) spouse.
2. On the surviving spouse’s death there is also a potential doubling-up of the £325,000 IHT allowance so potentially increasing the IHT threshold to £650,000. PLEASE NOTE: This has been designated by Government to increase further due to the Residence Nil-Rate Band (RNRB) up to a value of £1m dependent on a number of factors and further dependent on any future legislation amendment.
An estate will be entitled to the RNRB if:
- the individual dies on or after 6 April 2017;
- the individual owns a home, or a share of one, so that it’s included in their estate;
- the individual’s direct descendants such as children or grandchildren inherit the home, or a share of it; and
- value of the estate isn’t more than £2 million.
An estate will also be entitled to the RNRB when an individual has downsized to a less valuable home or sold or given away their home after 7 July 2015.
The maximum available amount of the RNRB will increase yearly .
For deaths in the following tax years it will be:
- £100,000 in 2017 to 2018
- £125,000 in 2018 to 2019
- £150,000 in 2019 to 2020
- £175,000 in 2020 to 2021
For later years, the maximum RNRB will increase in line with inflation (based on the Consumer Prices Index).
Any unused RNRB when someone dies can be transferred to the deceased’s spouse or civil partner’s estate. This can also be done if the first of the couple died before 6 April 2017, even though the RNRB wasn’t available at that time.
For estates valued at more than £2 million, the RNRB (and any transferred RNRB) will be gradually withdrawn or tapered away.
3. Gifts to UK registered charities attract automatic IHT exemption and there are certain circumstances where the IHT threshold can be reduced from 40% to 36% depending on the amount of charitable gifts made in a Will.
4. Business property, assets and shareholdings attract Business Property Relief and qualify for either a 100% or 50% exemption.
5. Agricultural land and business assets qualify for either a 100% or 50% exemption.