Quilter 3 What is UK inheritance tax? UK i nheritance tax (IHT) is a tax charged on your estate when you die. Your estate is basically everything you own, including your main property, any other properties, cars, boats, life assurance policies, life bonds and other investments, as well as personal effects such as jewellery. IHT is potentially charged at a rate of 40% on the value of everything you own above the nil-rate band threshold. The nil-rate band is the value of your estate that is not chargeable to UK inheritance tax. The amount is set by the government and is currently £325,000 which is frozen until 2021. When you die your estate is not liable to tax on any assets up to this amount. However, anything over this amount could be taxed at a rate of 40%. In addition, since 6 April 2017, if you leave your home to direct lineal descendants which includes amongst others your children (adopted, fostered and stepchildren) and grandchildren. The value of your estate before tax is paid, will increase with the addition of the residence nil-rate band. For the 2020/2021 tax year, the residence nil-rate band is £175,000. For more information, please go to: www.gov.uk/inheritance-tax Please note: If you are a UK resident who is domiciled (refer to the glossary for definition) outside the UK, you will only be subject to IHT on UK assets * in your estate on death. If you are uncertain about whether you are classed as a ‘UK domiciled individual’, please speak to your financial adviser or contact HM Revenue & Customs (HMRC). * A s of 6 April 2017, if a non-UK domiciled individual owns shares in a foreign close company or has an interest in a partnership which own UK residential property, the value of the foreign assets linked to that UK residential property is within the scope of UK inheritance tax.