What inheritance tax is payable in the UK?

UK Residents are subject to inheritance tax (IHT) on their UK and worldwide assets.

Non UK (and non UK Domicile individuals) are subject to inheritance tax only on UK sited assets – properties are of course a UK sited asset. From April 2017, there will be IHT charged on UK residential properties held by companies – on the death of a shareholder.

All individuals, resident or not, have a NIL inheritance tax rate band available to them. This is currently £325,000 per person and any unused portions may be transferred to the spouse. Therefore, a couple will be entitled to £650,000 free of tax. The amount subject to tax will depend on the value of the asset less any liabilities attached to the asset – e.g. a mortgage or loan. A shareholder of a company will be treated as an Individual (with £325,000 exemption) and the shareholder’s % of the property will be subject to IHT.

The inheritance tax rate is currently 40%.