Tax rates & allowances

Inheritance Tax

  2017/18 2016/17
Nil rate band (NRB) * £325,000 £325,000
NRB Residential enhancement (RNRB) †* 100,000 N/A
Rate of tax above nil rate band ** 40% 40%
Lifetime transfers to most trusts 20% 20%

† RNRB is available for transfers of a main residence to direct descendents. It tapers away at the rate of £1 for every £2 of estate value above £2m.

* Up to 100% of the proportion of a deceased spouse's/civil partner's unused NRB and RNRB band may be claimed to increment the current NRB and RNRB when the survivor dies.

** Rate reduced to 36% if at least 10% of the relevant estate is left to charity. Unlimited exemption for transfers between spouses/civil partners, except if UK domiciled transferor and foreign domiciled transferee, where maximum exemption £325,000.

100% Business Property Relief (BPR) for all shareholdings in qualifying unquoted trading companies, qualifying unincorporated trading businesses and certain farmland/buildings.

Reduced tax charge on gifts within 7 years before death

Years before death 0-3 3-4 4-5 5-6 6-7
% of full death tax charge payable 100 80 60 40 20

Annual exemptions for lifetime gifts include £3,000 per donor and £250 per recipient.

Tax rates 2017-2018PDF document