Taxation of Estates (Inheritance Tax - IHT)

Question 1

When is Inheritance Tax (IHT) payable?

Answer 1

If the estate value exceeds £325,000, IHT applies at 40%.
Spouse/civil partner exemption: No IHT on transfers to spouses/civil partners.
RNRB: Additional £175,000 relief if the home is left to direct descendants.

Question 2

How does the RNRB taper for large estates?

Answer 2

If the estate exceeds £2 million, RNRB reduces by £1 for every £2 over the threshold.
NRB and RNRB can be transferred between spouses.
other reliefs: Business Property Relief (BPR): Reduces IHT by 100% on certain business assets (e.g., unquoted shares, an interest in a business) or by 50% on other business assets.

Question 3

What are the options to pay IHT?

Answer 3

Direct payment from the deceased’s bank account.
Apply for a loan (from a bank or a PR with repayment from the estate).
Arrange an instalment plan with HMRC​.