A tax on transfers of value introduced to replace capital transfer tax. It is primarily a charge on death, on the value of an individual's estate as at the date of their death, over and above a certain allowance called the nil rate band. The rate of tax on death is 40%. In addition to the nil rate band, there are a number of exemptions, allowances and reliefs that may further reduce the amount of inheritance tax (IHT) payable.

IHT may also be payable in lifetime, when assets are given to a relevant property trust (RPT) or to a company. Assets within a RPT are also subject to an IHT charge of up to 6% every ten years and when capital is distributed from the trust.

For further information on IHT, see Inheritance tax toolkit.