Inheritance tax is charged at 40%, but very few estates pay the full amount on everything they hold. Exemptions and reliefs are the tools that bring the bill down — sometimes to zero — and knowing how they work is central to advising clients on lifetime gifts, drafting wills, and preparing an estate's IHT account. As a solicitor, this is where you turn a client's plans into real tax savings, provided each condition is met.
The difference is simple but important: exemptions take a transfer out of the charge altogether, while reliefs cut the value of the property before tax is worked out. This lesson takes you through both, in order.
- Exemptions and Reliefs Overview — the core distinction between exemptions and reliefs, and a map of what's available.
- Spouse, Annual and Small Gifts Exemptions — the unlimited spouse exemption plus the everyday lifetime allowances and their limits.
- Income, Marriage and Charity Exemptions — gifts out of income, wedding gifts, and the unlimited charity exemption.
- Business Property Relief — what qualifies for 100% or 50% relief, and why claims fail.
- Agricultural Property Relief — agricultural value, the rate conditions, and how APR interacts with BPR.
- Clawback of Relief on Lifetime Transfers — when relief is lost if the transferor dies within seven years.