Inheritance Tax
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Understanding UK Inheritance Tax
Inheritance Tax (IHT) is charged on the estate of someone who has died, including property, savings, investments and certain gifts made during their lifetime. With thresholds frozen and rising property values, more families are affected every year. SJPR Accountants helps you understand your exposure and plan to reduce it legally.
Key allowances
- Nil-rate band: £325,000 per person
- Residence nil-rate band: up to £175,000 when a main residence passes to direct descendants, tapered for estates above £2 million
- Unused allowances can transfer to a surviving spouse or civil partner
- The standard rate is 40% above the available allowances, reduced to 36% where at least 10% of the net estate is left to charity
Lifetime gifts
Many gifts are exempt, including gifts between spouses, the annual exemption, small gifts and regular gifts out of surplus income. Other gifts become exempt if the donor survives seven years, with taper relief reducing the tax on gifts made between three and seven years before death.
Recent changes to be aware of
From April 2026, the 100% rate of Business Relief and Agricultural Property Relief is limited to a set allowance of qualifying assets, with relief at a reduced rate above it. From April 2027, most unused pension funds are expected to fall within the estate for IHT purposes. These changes make reviewing your plans more important than ever.
How SJPR helps
- Estate valuation and IHT exposure calculations
- Lifetime gifting and trust planning
- Wills and business succession advice with legal partners
- IHT400 returns and probate support for executors
Frequently asked questions
What is the Inheritance Tax threshold?
Each person has a nil-rate band of £325,000, plus a residence nil-rate band of up to £175,000 when a home passes to direct descendants.
What is the seven-year rule?
Gifts to individuals generally become exempt if the donor survives seven years. Taper relief reduces the tax on gifts made three to seven years before death.
Can a spouse inherit tax free?
Transfers between spouses and civil partners domiciled in the UK are generally exempt, and unused nil-rate bands can pass to the survivor.
Are pensions subject to Inheritance Tax?
From April 2027 most unused pension funds and death benefits are expected to be included in the estate for IHT purposes.
Speak to SJPR Accountants. Call 020 3371 0292 or contact our London team to book a consultation.
Address
- 225 Clapham Road London SW9 9BE
- Unit 41 Skylines Village, Limeharbour London E14 9TS
Contact
- 020 3371 0292
- 020 38699900
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