Inheritance Tax (IHT) - Exemptions
Exempt Transfers
- Gifts to UK domiciled spouse (must be married, does not apply to 'common-law' partners). For non-UK domiciled spouse a limit of £55,000 applies.
- Normal Expenditure of Income (care is needed here).
- Small Gifts (£250 maximum per person, with no limit to number of recipients: cannot be added to increase any other exemption).
- Annual Exemption (£3,000 max per taxpayer. Previous year's exemption can be used, but current year's exemption must be used in full, first).
- Gifts in consideration of marriage: Gifts must be made conditional to the marriage. The Maximum Exemption applies to the couple, not to the Bride and Groom separately. (See list below)
| Gifts Made By | Maximum Exemption |
|---|---|
| Each Parent | £5,000 |
| Grandparents & Great Grandparents | £2,500 |
| Bride or Groom | £2,500 |
| Any Other Person | £1,000 |
- Gifts to Charities (no limit to amounts or number of charities chosen, charities not registered as charities in the UK do not normally qualify).
- Gifts for National purposes (e.g. colleges, universities, National Trust, National Gallery, British Museum etc).
- Gifts of Heritage Property (recipients must agree to maintain and preserve property and to allow reasonable public access).
- Gifts to Political Parties (to qualify, the political party, at last general election, must have had 2 MPs or 1 MP + more than 150,000 votes).
- Gifts to Housing Associations (must be gifts of UK land).
- Certain transfers to Employee Trusts (subject to certain conditions relating to voting control and qualification of beneficiaries).
- Ex-gratia payments to Japanese POWs.
- Holocaust compensation.
- Death in consequence of Active Service (either death as a direct consequence of armed conflict or where wounds so sustained, contributed to death later on).
