Inheritance tax meaning

STOP PRESS: Abolition of non-dom regime and introduction of residence-based IHT regime Finance Act 2025 (FA 2025), which obtained Royal Assent on 20 March 2025, legislates to abolish the remittance basis of taxation and to introduce a residence-based regime from 6 April 2025. FA 2025 also removes domicile as the principal criterion for determining liability to inheritance tax. Further adjustments include: Amendments to the rules that define excluded property status Abolition of protected settlements status for offshore trusts Changes to overseas workday relief For information on these changes, see: Practice Notes: The abolition of the remittance basis of taxation from 2025–26 Practice Notes: A new residence-based regime for IHT from 2025–26 See also: Finance Bill Tracking Service: Key dates (Finance Bill 2025) Finance Act 2025 This table compares the principal taxes applicable to home ownership structures for UK residential property where the property is to be...

ARCHIVED: This flowchart is archived and no longer maintained. Procurement Act 2023 From 24 February 2025, the key provisions of the Procurement Act 2023 (PA 2023) took effect and now apply...

Flowchart This Flowchart aims to guide you through dealing with a superSAR submitted under the Proceeds of Crime Act 2002, as amended by the Criminal Finances Act 2017. See further Practice Note: Proceeds of Crime Act 2002—information sharing in the regulated sector—superSARs...

Flowchart This Flowchart sets out the procedural steps where a claim arises under the Inheritance (Provision for Family and Dependants) Act 1975 (I(PFD)A 1975). For additional guidance on I(PFD)A 1975 claims, please refer to: Family provision claims—overview...

In this issue: Companies and corporation tax Employment taxes Taxes management and litigation International Individuals Daily and weekly news alerts New and updated content Dates for your diary Trackers Useful information Companies and corporation tax Court of Appeal holds that payments in settlement of regulatory breaches were tax deductible (ScottishPower v HMRC) As noted in Tax weekly highlights—23 January 2025, the Court of Appeal has concluded that consumer redress paid by ScottishPower to resolve regulatory investigations is deductible for corporation tax, reversing the outcomes reached by both the First-tier Tax Tribunal (FTT) and the Upper Tribunal (UT). On the facts, the Court determined these sums were not fines or penalties and so the rule in McKnight (HM Inspector of Taxes) v Sheppard, which renders fines and penalties non-deductible, did not apply. The Court also dismissed the presence of any broader principle, in this context, that a payment must follow the tax treatment of...

In this issue: Wills Probate Trusts UK taxes for Private Client HMRC Manuals updates Tax avoidance, evasion and non-compliance Contentious trusts and estates Scotland, Wales and Northern Ireland International Question of the week Daily and weekly news alerts LexTalk®Private Client: a Lexis+® community New and updated content Dates for your diary Trackers Latest Q&As Useful information Wills No line of sight—due execution and presence In the Estate of Kathleen Coady, District Judge Chloë Phillips delivered judgment in Coady v Coady PT-2023-BHM-000025 (Business & Property Courts in Birmingham (Probate)), addressing as a preliminary question whether a coronavirus (COVID-19) era ‘garden signing’ met section 9 of the Wills Act 1837. The court concluded it did not, rendering the 25 April 2020 Will invalid. Written by Charlotte John of Gatehouse Chambers. See News Analysis: No line of sight—due execution and presence In the Estate of Kathleen Coady. Probate...

In this issue: Budgets and Finance Bills UK taxes for Private Client HMRC Manuals updates Tax avoidance, evasion and non-compliance Family businesses and ownership structures Contentious trusts and estates Pensions, insurance and tax efficient investments International Question of the week Daily and weekly news alerts LexTalk®Private Client: a Lexis+® community New and updated content Trackers Latest Q&As Useful information Budgets and Finance Bills Finance Bill 2026 published Finance (No 2) Bill 2024–26 was released on 4 December 2025 with explanatory notes. Also known as Finance Bill 2026 (FB 2026), it was presented in the House of Commons and received its first reading on 2 December 2025. For insights into the principal Private Client measures in FB 2026, see News Analysis: Private Client—publication of Finance Bill 2026. For commentary on the key Tax provisions, see News Analysis: Tax—publication of Finance Bill 2026. For comprehensive tracking of FB 2026—covering a...

This Practice Note outlines the principles governing the calculation and use of the basic nil rate band (NRB) and the transferable NRB on death, and flags key practical points on the operation of those calculations. For broader guidance on the NRB, the transferable NRB and the residence NRB (RNRB) (also called the additional threshold), including how to claim these reliefs and the relevant time limits, see Practice Notes: IHT—nil rate band (NRB) and transferable NRB and IHT—residence nil rate band. Nil rate band The NRB removes a significant slice of a deceased person’s estate from inheritance tax (IHT), and in many cases eliminates any IHT liability altogether. The current NRB threshold is £325,000, which produces an IHT saving of £130,000. In the RNRB context, which applies to deaths on or after 6 April 2017, the NRB is sometimes described as the basic NRB. For historic threshold figures, see: HMRC: IHT thresholds and interest rates. In certain cases, the free estate on death may not secure the whole of...

Follow the link below to download the presentation. Contents Updates to APR/BPR Transfer between spouses Reasons asset targeting falls short APR/BPR trust clause Funding the trust Case study Case study solution Anti‑fragmentation Administration checklist Client communications Pitfalls and risks Summary These PowerPoint slides are designed as a foundation for a training session on Agricultural and Business Property Relief for the relevant fee earners. The presenter can tailor them—by trimming or expanding the points—to match the audience. How to use these slides Allow around two minutes per slide, and use the case study for a 20‑minute breakout. If more depth is required, the content can be delivered over two or three separate training sessions. Further reading Autumn Budget 2024—Private Client analysis Hot topic—the reform of business property relief and agricultural property relief Change in the approach to IHT planning for farmers Tax—Finance Act 2026...

General principles The trustees are, for tax purposes, regarded collectively as a single person, distinct from the individuals who serve as trustees from time to time. An interest in possession (IIP) means a beneficiary has an immediate right to the trust income as it arises. That income belongs to the beneficiary, and the trustees lack authority to retain it, save to meet proper expenses. Where trust income does not fall within the definition of accumulated or discretionary income in section 480 of the Income Tax Act 2007 (ITA 2007), it is treated as the income of ‘other persons’ and taxed at the basic and dividend rates. Ultimately, the income is assessed on the beneficiary at their personal rates, irrespective of when, and even whether, it is actually paid to them. Nevertheless, the trustees are liable to income tax on income arising from trust property because they are the legal owners of that property and thus the persons who receive the income. The way IIP and discretionary trusts are differentiated...

FORTHCOMING CHANGE: The government has set out its proposals to apply inheritance tax to unspent pension pots on death, effective from 6 April 2027. For further details, please see News Analysis: HMRC confirms new IHT rules on unused pension funds to apply from 6 April 2027...

FORTHCOMING CHANGE: Potential changes to Wills Act 1837 The Law Commission’s review of wills culminated in a final report on 16 May 2025. Volume II contains a Draft Bill proposing replacement of the Wills Act 1837. For details of these proposals, including the published draft legislation, see Practice Note: Hot topic—modernising Wills and Modernising wills: Final Report Volume II: Draft Bill for a new Wills Act. STOP PRESS: Abolition of non-dom regime and introduction of residence-based IHT regime The Finance Act 2025 (FA 2025), which received Royal Assent on 20 March 2025, implements the abolition of the remittance basis and introduces a residence-based regime from 6 April 2025. FA 2025 makes residence, rather than domicile, the main determinant of liability to inheritance tax. changes to the rules defining excluded property status; removal of protected settlements status for offshore trusts; and modifications to overseas workday relief. For further information, see Practice Notes: The abolition of the remittance basis of taxation...

FORTHCOMING CHANGE: Potential changes to Wills Act 1837 On 16 May 2025, the Law Commission’s review of Wills published its final report, formally setting out its conclusions, with Volume II containing a draft Bill intended to supersede the Wills Act 1837. For details of these proposals, including the published draft legislation, consult Practice Note: Hot topic—modernising Wills and Modernising wills: Final Report Volume II: draft Bill for a new Wills Act. STOP PRESS: Ending the non-dom regime and moving to a residence-based IHT regime. The Finance Act 2025 (FA 2025), which obtained Royal Assent on 20 March 2025, enacts legislation for the removal of the remittance basis of taxation and substitutes a residence-based system commencing on 6 April 2025. It also displaces domicile as the principal determinant of inheritance tax (IHT) liability for individuals. Further measures cover revisions to the rules for excluded property status, the removal of protected settlements status for offshore trusts, and alterations to overseas workday relief as applicable. For more on these reforms, see...

We proceed on the basis that the default legacy will take the form of a discretionary trust in favour of the testator’s grandchildren and does not create an immediate post-death interest (IPDI) trust under section 49A of the Inheritance Tax Act 1984 (IHTA 1984). We further assume that it is not a disabled trust within IHTA 1984, s 89...

Sale by PRs or appropriation to beneficiaries We understand you are asking when it is better for the personal representatives (PRs) to dispose of an estate property, or instead to appropriate it to the beneficiaries so that they handle the sale themselves. This choice typically arises where: the beneficiary(ies) has/have part or all of their capital gains tax (CGT) annual exemption available the beneficiary(ies) will pay CGT at 18% on any part of a gain the beneficiary(ies) has/have losses available to offset against any gain the sale will make a loss and the PRs will not be making any further disposals that may produce gains to utilise the loss A death is not usually a chargeable occasion for CGT. For these purposes the PRs are treated as acquiring the assets at market value on the date of death; effectively, all prior accrued gains are eliminated and the PRs start again with a clean slate...

A nil-rate band discretionary trust A nil-rate band discretionary trust is a common method for reducing inheritance tax. It typically concerns property held by two people (most often a husband and wife as co-owners). They must own the home as beneficial tenants in common, meaning that any existing beneficial joint tenancy has to be broken. Each then executes a Will so that their share of the property, up to the inheritance tax nil-rate band, is directed not to the spouse but into a discretionary trust. The usual discretionary beneficiaries are the surviving spouse and the children. Instead of the survivor taking outright the other’s share of the property (whether by survivorship where it was a beneficial joint tenancy or by a legacy), the trust retains that share and, on the death of the survivor, the portion within the trust does not fall into the estate for inheritance tax purposes...