Inheritance tax

Background

The Inheritance Tax Act 1984 (IHTA 1984) provides the legislative framework for charging inheritance tax (IHT).

The most common incidence of IHT is on the deemed transfer of value that takes place on a person's death, equal to the value of their estate immediately before death (see: 'The charge to IHT on death' below). IHT may also be payable on certain lifetime transactions (such as gifts to other individuals or transfers into trust). For a UK domiciled or deemed domiciled individual, IHT is payable on worldwide assets (with credit for tax paid overseas) whereas a non-UK domiciled individual will, in general (but subject to exceptions), only pay tax on assets situated in the UK. The concept of domicile is critical to the scope of IHT and the rules relating to deemed domicile changed with effect from 6 April 2017. For further information, see Practice Note: Deemed domicile for tax from 6 April 2017.

There are a variety of reliefs and exemptions from IHT, such as business property relief (BPR), agricultural property relief (APR), taper relief and the spouse exemption. Furthermore, liabilities and debts