These vary depending on the relationship with your beneficiaries under your Will and the type of asset to which we refer.

Business Property Relief - This is the single most useful Inheritance tax relief available with absolutely no financial limit to the amount of business property relief that a taxpayer may claim where the qualifying conditions are met and could potentially be used to completely exempt an estate worth hundreds of millions of pounds from Inheritance tax!

Business property relief is available where the following three conditions are satisfied:

•  The business concerned is a qualifying business
•  The asset is relevant business property
•  The asset has been owned by the deceased for at the least the relevant minimum period.

This relief is available to individuals who own a business at the date of their deaths. The relief is assessed at either 50% or 100% of the value of the business depending on the length of ownership, type of business and the element of control that the deceased had over the business.

This relief extends to qualifying businesses or companies. 100% relief is allowed to individuals in business as sole traders, in partnership, those who own shares in an unquoted company (Private Limited Company) and those who own controlling interests in quoted companies (Public Limited Company).

50% relief is extended to those individuals who own shares in quoted companies and to property or assets such as plant and machinery used in a business.

What is a Business

The activity must be a serious undertaking earnestly pursued with reasonable or recognisable continuity conducted in a regular manner under recognised business principles predominantly concerned with the making of supplies to consumers of goods or services of a kind which, subject to differences in detail, are commonly made by those who seek to profit by them.

NB The intention to make a profit is essential

As a general rule, property investment or letting businesses are generally not accepted by the Revenue as being qualifying businesses for the purposes of Business Property Relief

Spouse and Civil Partner Exemption - All assets that pass directly to these individuals are exempt from tax. No IHT is due on these transfers or gifts. An exception here is if you divorce. No such exemption applies.

Gift in Expectation of Marriage - The amount that you can give is totally dependant on your relationship with the individual to whom the gift is given:

Parents can give away a gift of money in the sum of £5,000.00
Grand Parents £2,500.00
A N Other £1,000.00

Small Gifts - A maximum of £250.00 per person may be given away as long as this money is derived from the course of your labour. It should be noted that you cannot combine the above with this above gift.

Annual Exemption

You have an annual exemption of £3,000. This can be rolled over for a maximum of 12 months so that you can actually give £6,000.00.

This gift cannot be combined with the small gift but it can be combined with the gift in expectation of marriage to a maximum of £8,000.00.

Gifts that are part of your Normal Expenditure

Any gifts that are out of your after-tax income (but not capital) are exempt from inheritance tax if they are part of your regular expenditure. They include:

Gifts for birthdays or Christmas

Premiums for life policies

You must remember to record all payments because this proves that they are met from your after-tax income and that they are regular.

Maintenance Gifts

You are permitted to make regular tax exempt maintenance payments to the following:

Spouse or civil Partner
Divorcees or Separated individuals
Old and infirmed because they are unable to maintain themselves
Children (including adopted children) who are in full-time education
Whilst there is no actual limit, it is wise to ensure that such payments are regular and proportionate with your own living expenses.

Charities - all gifts to charities are exempt.

Potentially Exempt Transfers (PETs)

These are lifetime transfers or gifts that you can give away, being either money or assets. As long as you then survive for 7 years from the date of disposition, there will be no IHT to pay on the value of that transfer. There is a reducing liability from the third year onwards.

It is extremely important to note that only "outright gifts" qualify as PETs. You must have no continuing interest in the gift.

An example is where you leave your home to your children but continue to live in the property. If you do not pay a full commercial rent for that continued use then the property will remain as part of your estate for tax purposes.

Property falling outside of the estate for IHT purposes?

Such assets include Life Policies written in the name of a third party such as your mortgage lender, spouse, partner, business partner or children because your estate does not actually realise any benefit from the policy when it matures on your death.

Death in Service trust funds written in the name of another as above.