Inheritance Tax (IHT) is charged in the following circumstances:
- the value of an estate at death,
- certain lifetime gifts, and
- certain transfers into and out of trusts
Currently, the threshold (or nil rate band) is £312,000. If the value of your estate, including your home and any gifts you have made in the last seven years, comes to more than this, tax will be due on the balance at 40% if you die. If you are married and you are the second to die, you may able to combine both of your available allowances before Inheritance Tax becomes payable. The nil rate band will rise to £325,000 in the 2009/10 tax year.
Do not forget that the value of your property is included in your estate, and any gifts made in excess of the annual allowances detailed below, in the past, may reduce your overall nil rate band.