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Introduction

The purpose of this module is to teach you the basic rules surrounding Inheritance tax (IHT) that you will need to know in practice. It is not intended to make you an expert on the subject but is instead written at an introduction level. 

If in doubt, please seek specialist advice from a Chartered Tax Adviser. 

IHT is a very unpopular tax that is charged on “transfers of value.” 

A transfer of value arises in two situations:

  1. When a gift is made; and 
  2. On death

On death the tax is calculated based on the value of that person’s estate as if they had given away all their assets at the moment of their death.

The tax is based upon the loss to the transferor i.e. by the amount their estate has decreased as a result of the transfer being made. 

As you will see the rate of tax varies depending on who the beneficiaries of the transfer are.