Tax Calculator

Notes on Inheritance Tax calculator

Spouse relief

No inheritance tax is paid on transfers to a surviving spouse. This rule was augmented by inheritance tax spouse relief introduced with immediate effect on 9th October 2007. This relaxed the usage of the nil rate band for inheritance tax between spouses (and to same sex couples who have registered their civil partnership).

Previously, when a surviving spouse died only their own nil rate band of £325,000 was available. A couple now shares a joint nil-rate band of £650,000 so that any relief not used when the first spouse dies is available to the surviving spouse.

Donations to charities are exempt

Donations to UK registered Charities are exempt.

Gifts made in the 7 years before death

Account must be taken of certain gifts made in the seven years before the person died. Not all gifts in this seven year period have to be included. All gifts between spouses are exempt as are a single gift of £3,000 each year, any number of smaller gifts of £250, £5,000 to a child getting married and finally gifts that can be called normal habitual expenditure (which means that they are made out of income not capital).

Gifts with a retained interest

Furthermore, if the person who has died gave away an asset in their lifetime but reserved an interest in it, then the value of the asset will also be included in their estate. This is the case even if the gift was made more than seven years before death.

This usually happens when a person gives their house to their children but continues to live there until their death. Here the value of the house will be included in the estate for the purposes of calculating the Inheritance Tax liability.

Business reliefs

You should be aware that there are also certain tax reliefs available for property which is used in a business. Property may qualify for business relief, agricultural relief and woodland relief.

Please note

The information which we provide through Lasting Post is in outline for information or educational purposes only. The information is not a substitute for the professional judgment of a solicitor, accountant or other professional adviser. We cannot guarantee that information provided by Lasting Post will meet your individual needs, as this will very much depend on your individual circumstances. You should therefore use the information only as a starting point for your enquiries.