Guide To Inheritance Tax

Inheritance tax is a widely unpopular tax, but planning ahead can limit your inheritance tax exposure.

Inheritance tax (IHT) is a tax on transfers of value by individuals. It may be payable on certain lifetime transfers, on the value of an estate at death, on certain transfers into and out of trusts and on some transfers made by close companies. A transfer will either be a chargeable transfer, a potentially exempt transfer (PET) or exempt. IHT is levied on 'chargeable transfers'.

When valuing a transfer one looks at the loss to the donor and not the benefit to the donee.

Broadly, a UK domiciled or deemed domiciled individual is subject to IHT on chargeable transfers of worldwide assets, while a (non-UK deemed domiciled) foreign domiciliary's IHT exposure is limited to UK-sited assets.