Inheritance Tax (IHT) 2016/17 - Cutter & Co Chartered Accountants

A historical record of Inheritance Tax in the UK for the tax year 2016/2017

The following information is a historical record of the Inheritance Tax in the United Kingdom for the tax year 2016/2017. The information was correct at the time of publication.

If you are looking for this tax year’s information, please visit our resources section, where you can find recent Inheritance Tax information.

Latest tax rates & allowances

Rates and thresholds

From	2016/17	2015/16
Nil rate band	£325,000	£325,000
Tax paid on legacies on death	40%	40%
Tax paid if at least 10% of net estate is left to charity on death	36%	36%
Gifts made up to seven years before death (see lifetime gifts)	40%	40%
Lifetime transfers to most trusts (note 5)	20%	20%

Notes

Up to 100% of the proportion of a deceased spouse’s/civil partner’s unused nil rate band may be claimed to increment the current nil rate band when the survivor dies.
Gifts or legacies to charities are not charged to IHT.
If the donor pays the IHT due on a lifetime gift the effective rate is 25%.
IHT due on a deceased’s estate and on gifts within seven years of death is generally due six months after the month of death, but in practice it must be paid before probate is granted.
IHT on chargeable lifetime transfers to trusts is payable on the later of six months after the month of transfer, or 30 April in the next tax year.

Lifetime gifts

Reduced tax charge on gifts up to seven years before death
Years before death	0-3	3-4	4-5	5-6	6-7
Percentage of IHT death charge payable	100%	80%	60%	40%	20%

Note

Lifetime gifts between individuals (‘potentially exempt transfers’) are only charged to IHT if the donor dies within seven years of the gift.

Exempt gifts

Amount of relief	Conditions
£3,000 per tax year	Amount per donor; unused exemption can can be carried forward one year
£250 per tax year	De minimis amount per recipient
Unlimited	Regular gifts out of surplus income
Unlimited	To UK domiciled spouse or civil partner
£325,000	To non-domiciled spouse/civil partner
£5,000	From parent of party to marriage (see note)
£2,500	From party to marriage or from remoter ancestor (see note)
£1,000	From any other person (see note)

Note

Must be made to one or both parties to a marriage in consideration of that marriage. These rules apply equally to those entering a civil partnership.

Business and agricultural property

Amount of relief	Property and conditions
100%	All shareholdings in unquoted trading companies, an unincorporated business or interest in such a business
50%	Controlling shareholding in quoted company, land and buildings used by transferor’s company or partnership
100%	Agricultural value of qualifying farmland and buildings

Note

In all cases the property must have been owned for at least two years, and other conditions apply.