This guidance note outlines how to calculate the amount of inheritance tax (IHT) that arises on death. It should be read in conjunction with the example calculations indicated in the text.

The tax charge on death falls under two headings:

1. •

   the ‘additional charge’, which arises on the chargeable lifetime transfers (CLTs) and the potentially exempt transfers (PETs) made in the seven years before death, and

2. •

   the ‘estate charge’, which arises on the value of all the property the deceased owns (or is deemed to own) immediately before death

HMRC has produced an online IHT checker to give an estimate of the IHT due. HMRC warns, however, that this does not calculate the IHT ― it merely estimates ― and is not a substitute for the required reporting procedures. Other HMRC online calculators also exist to calculate residence nil rate band and to check whether the estate qualifies for the reduced rate.