Get UK IHT35 2022-2024

How would IHT be calculated on a lifetime gift, if I die within seven years? For IHT there is a tax threshold, known as the nil rate band, and below this limit you pay no tax as the rate is set at 0%. For 2023/24 the basic threshold is £325,000. The rate is then usually 40% on anything above this amount.

The current rate of inheritance tax in Scotland on death is 40% and 20% on lifetime transfers if it is possible to charge them. In the 2021/2022 year, the first £325,000 is considered the nil rate band, which means it is not chargeable to inheritance tax in Scotland and is at a rate of 0%.

The unlimited gifting rule Some gifts are automatically exempt from inheritance tax. The annual exemption lets you give away £3,000 each year – and £6,000 in the first. But if you want to give away a larger sum, you will have to wait seven years before it becomes tax-free.

In the current tax year, 2023/24, no inheritance tax is due on the first £325,000 of an estate, with 40% normally being charged on any amount above that. However, what is charged will be less if you leave behind your home to your direct descendants, such as children or grandchildren.

Post-mortem relief As the name suggests, this relief concerns instances where assets are sold for a lower amount than their market value at the date of death (used for probate purposes).

Use form IHT35 to claim relief when you sell 'qualifying investments' that were part of the deceased's estate at a loss within 12 months of the date of death. Qualifying investments are general shares or securities listed on a recognised stock exchange, or holdings in authorised unit trusts.

To encourage more people to leave donations to charity in their will, any gifts to a qualifying charitable body are exempt from IHT. This also applies if they are gifts made during your lifetime.