Inheritence Tax (IHT) meaning

Inheritance Tax (IHT) is the tax charged on transfers of wealth on death and on certain lifetime transfers and trust interests, commonly arising in probate, estate planning and trust administration. In the UK (England & Wales, Scotland and Northern Ireland), IHT is governed principally by the Inheritance Tax Act 1984 and related Finance Acts. It applies to an estate on death, chargeable lifetime transfers (e.g. transfers into most trusts), potentially exempt transfers if the donor dies within seven years, gifts with reservation of benefit, and periodic and exit charges on relevant property trusts. Reliefs and exemptions include the spouse/civil partner and charity exemptions, and business and agricultural property reliefs; the nil‑rate band (and residence nil‑rate band) and tapering rules are key planning features. Liability and filing obligations typically fall on personal representatives or trustees, with valuation, domicile and situs rules determining scope, and returns made to HMRC. In Ireland, the equivalent tax is Capital Acquisitions Tax (CAT) on inheritances and gifts under the Capital Acquisitions Tax Consolidation Act 2003. Practitioners refer to “inheritance tax” as the CAT payable on an inheritance. Thresholds, rates and reliefs differ from the UK, but the practical issues—valuation, reporting and use of reliefs—are broadly comparable.