IHT is collected on the death of an individual based on the value of their death estate. However, if IHT only applied on death, it would be an easy tax to avoid by giving away assets immediately before death. Therefore, there are IHT implications arising on some lifetime gifts as well as on death.

Inheritance tax is charged on

  • a transfer of value
  • of chargeable property
  • by a chargeable person

A charge to IHT arises:

  • on the death of an individual
  • on lifetime gifts where the donor dies within 7 years of date of gift
  • on some lifetime gifts which are taxed immediately

Individuals are assessed to IHT as follows

Domicile status                                                            Charged IHT on

  • UK Domililed orDeemed domiciled in the UK     Transfers of worldwide assets
  • Non-UK Domiciled                                             Transfer of UK assets only


Annual Exemption

The first £3,000 of the value transferred in each tax year is exampt.

The procedure to calculate the lifetime IHT on a CLT(Chargeable Lifetime Transfer)

The procedure to calculate the lifetime IHT on a CLT is as follows

  1. Calculate the chargeable gift
  2. Calculate the gross amount of the gift to carry forward for future computations
  3. Calculate the tax liability on each gift in chronological date order taking account of:
  • who has agreed to pay the tax: the donor or the donee
  • the nil rate band
  • the appropriate rate tax
  • the seven year cumulation period

The normal due date of payment of lifetime IHT

6 April to 30 September                     30 April in the following year

1 October to 5 April                           Six months after the end of the month of the CLT


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