Calculating the IHT charge on death

The following Private Client practice note provides comprehensive and up to date legal information covering:

  • Calculating the IHT charge on death
  • IHT charge on death
  • Additional charge on death
  • Estate charge on death
  • Information required to calculate IHT on death
  • Provisional IHT calculations for clients
  • Working out the IHT using the Simple IHT calculation in Form IHT400
  • Working out the IHT using IHT400 Calculation

Calculating the IHT charge on death

This Practice Note outlines how to calculate the amount of inheritance tax (IHT) that arises on an individual’s estate on death. For a broader explanation of the IHT charge on death, see Practice Note: IHT—the charge on death.

IHT charge on death

The IHT charge on an individual’s death falls under two headings:

  1. the 'additional charge'—which can arise on chargeable lifetime transfers (CLTs) and potentially exempt transfers (PET) made by the deceased in the seven years before death, and

  2. the 'estate charge'—which arises on the value of all the property the deceased owned (or was deemed to own) immediately before death

Additional charge on death

Additional IHT may be due on CLTs that have already suffered IHT at the lower lifetime rates.

Where the deceased has not survived seven years from the date of a PET, the failed PET is treated as a chargeable transfer and IHT arises for the first time.

The IHT due on each of the above transfers depends on:

  1. the amount of the chargeable transfer in question, and

  2. the total amount of the gross chargeable transfers (including failed PETs where relevant) made within the period of seven years preceding that chargeable transfer

This means that transfers made up to 14 years before death may have to be taken into account as part of the calculation. For example, Bruno made a gift of

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