Introduction to IHT

In this lesson

1. 0:00 Introduction to inheritance tax
2. 0:33 When inheritance tax arises
3. 1:20 Inheritance tax on death
4. 1:54 Residence requirements and tax rates
5. 3:01 Taper relief and nil rate bands

About this lesson

This foundation is essential for the Taxation paper, where you'll apply these principles to calculate IHT on both lifetime gifts and death estates, using the nil rate band, taper relief, and residence nil rate band to minimise tax liability. The lesson covers the scope of inheritance tax and when HMRC charges it. You'll discover that IHT isn't just triggered on death—gifts made during your lifetime can attract tax if they're not exempt, and HMRC can challenge attempts to reduce your estate through strategic giving. You'll also learn how the seven-year rule works: gifts made more than seven years before death become exempt, while those within seven years may still be taxable. The death estate itself comprises all assets owned at death and is subject to IHT, though long-term UK residents (ten or more of the last 20 years) face tax on worldwide assets. Understanding the tax rates and allowances is crucial: lifetime transfers are charged at 20%, death transfers at 40%, and both benefit from the nil rate band (currently £325,000) and potential taper relief. The residence nil rate band offers additional relief on main residence transfers. These concepts form the backbone of IHT planning and calculation throughout your studies.

Duration: 3m