Inheritance Tax Exemptions

• Applies where death occurs on or after 6 April 2017
• Available if the deceased owned a property which they used as their home and leaves the property to direct descendants (children, grandchildren, great-grandchildren, stepchildren. It also includes the direct descendants’ spouses or widows/widowers, as long as they had not remarried before your death)
• The direct descendant needs to inherit outright or at least have an interest in a trust that arises immediately upon your death
• The amount of RNRB is limited to the value of the equity in the property in question
• RNRB can be withdrawn for estates with a net value of more than £2m, tapered by £1 for every £2 the estate is over £2m 

• Gifts of up to £250 to any other person – as long as you have not made gifts to them already using any other allowance
• Gifts of £5,000 to a child if they are getting married/entering into a civil partnership
• Gifts of £2,500 to a grandchild if they are getting married/entering into a civil partnership
• Gifts of £1,000 to anyone else if they are getting married/entering into a civil partnership
• Certain gifts that you make on a regular basis, for example paying for your adult child’s rent, as long as you can demonstrate that this is paid from your excess monthly income, and you can still afford your own personal living costs rom income too. A history of this pattern of regular gifting must be demonstrated, or at the very least that there was an intention for this to be the case, had the gifting only commenced shortly before your death.

• The gift will be a Potentially Exempt Transfer (PET) which means if you die within 7 years of making the gift it will still be taken into account when calculating the value of your estate for IHT purposes
• You must be sure you want to make the gift as once you have made the gift, that asset will no longer be yours
• Make sure you do not fall into the trap of a Gift with Reservation of Benefit (GRoB); this is where you make the gift, but you retain all the benefit. This may have some both inheritance tax and capital gains tax consequences.
  
  It is important to take legal advice on any gifting to ensure it has the outcome you are seeking.

Spouse / civil partner exemption

• Available for gifts during lifetime and on death
• As the gifts are exempt, they do not use up your NRB or RNRB. Any unused NRB and RNRB from the first spouse to die can be used on the death of the surviving spouse, resulting in a possible combined NRB and RNRB of potentially up £1m being available
• Where a spouse is non-UK domiciled, the exemption may be limited

Charity Exemption

• Available for gifts during lifetime and on death
• Can include gifts to charities, political parties, and other donees who provide a benefit to the UK, such as museums, libraries, universities. It is important to check that the establishment you are wishing to gift to qualifies for this exemption
• The value of the gift will not be taken into account as part of your estate when calculating IHT
• If you leave 10% or more of your estate to charity, your estate may benefit from a reduction in the rate of IHT from 40% to 36%

Business Property Relief (BPR)

• You can get 100% relief on a business or interest in business, and on shares in an unlisted company.
• You can get 50% relief on controlling shares in a listed company (i.e. where you have more than 50% of the voting rights), on any land, buildings or machinery  
• Available for gifts during lifetime and on death (but be aware that the relief can be withdrawn if you die within 7 years of making the gift and the person you gifted it to – as long as they are not your spouse or civil partner – no longer owns the asset, or the nature of the asset means it can no longer qualify for BPR)
• You must have owned the business assets for at least 2 years before the transfer (subject to some exceptions)
• It is not available for businesses dealing entirely or mainly in stocks and shares, securities, investments, land or buildings

Agricultural Relief (AR)

• You can get 100% relief on the value of the asset, but this can be reduced to 50% in certain circumstances
• Available for gifts during lifetime and on death (but be aware that the relief can be withdrawn if you die within 7 years of making the gift and the person you gifted it to – as long as they are not your spouse or civil partner – no longer owns the asset, or it is no longer used for agricultural purposes)
• It is not available for livestock, farm equipment and machinery, and harvested crops
• The relief is restricted to assets situated in the UK

• Thinking carefully about who you wish to benefit in your Will
• Thinking about how you can divide your estate to take better advantage of the exemptions
• Where appropriate, you can consider whether there are any lifetime gifts you can make now
• Putting yourself in the position whereby you can make your decisions in full knowledge of the implications and possibilities.