The residence nil-rate band is an additional nil-rate band available to an estate where a property is owned (which has at some point been a residence of the deceased) and is left to direct descendants. The residence nil-rate band may also be available even if a property has been sold since 8 July 2015 under the downsizing protection rules. Where an amount has been protected under these rules please enter the value of the residence nil-rate band protected in the 'Future exemptions' box’

Spouse/civil partner* exemption

There is no IHT to pay on transfers between most married couples or civil partners living inside the UK, whatever the amount. Effectively the amount liable to IHT is deferred until the death of the second spouse/civil partner.

Annual exemption

Individuals are entitled to give away £3,000 in total, in any tax year, free from IHT. This applies to each person in a marriage or civil partnership. If the exemption is not used in one year, it can be carried over to the next. So a husband and wife could give £6,000 to their family each year, or £12,000 in any year when they did not make a gift in the previous year.

Small gift exemption

Gifts of up to £250, to any number of people in one year, are exempt from IHT. These small gifts cannot be part of a larger gift to any one person so, for example, they could not be made to the same family members who benefited from a gift under the £3,000 annual exemption.

Normal expenditure out of income

Regular gifts out of income can be made that are exempt from IHT. They must be made every year, and be paid for out of income, for example from dividends or interest from investments. They must not affect your client's standard of living, and there is no upper limit. However, the exemption from IHT can only be confirmed on death.

Marriage or civil partnership gifts exemption

Further gifts to children, grandchildren or other people when they marry or enter into a civil partnership can be made as follows:

Other exemptions

Gifts made during your client's lifetime for bringing up children or other dependants can be made free from IHT. This also applies to gifts or bequests to charities, political parties, universities, and for national purposes or the public benefit.

A direct descendant of a person is:

• a child, grandchild or other lineal descendant of that person
• a spouse or civil partner of a lineal descendant (including their widow, widower or surviving civil partner)
  

• a child who is, or was at any time, that person’s step-child
• an adopted child of that person

• included in the deceased’s estate
• lived in at some stage by the deceased before their death