The tax charge on death falls under two headings: the additional charge which arises on the chargeable lifetime transfers (CLT) and the potentially exempt transfers (PET) made in the seven years before death; and the estate charge which arises on the value of all the property the deceased owns immediately before death. This note covers the calculation of the amount of inheritance tax that arises on death.
Points discussed within this guidance note:
> The rates of IHT
This note considers the tax treatment on death. When a chargeable transfer is made, whether during lifetime or on death, part or all of it may fall within the nil rate band. To the extent that the transfer exceeds the nil rate band, it is charged to tax at either the death rate or the lifetime rate.
> Additional charge on death
Additional tax may be payable on CLTs that have suffered lower lifetime tax, or PETs that have not matured into full exemption at the time of death. This note explains what is covered and how to calculate additional tax that may become due on death.
> Calculation of the tax on each transfer
> Estate charge on death
> Calculation of the estate charge
> Apportioning the charge
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