Budget Explained: Inheritance tax

accawebmaster —  23 March 2012 — Leave a comment

By ACCA’s budget team

IHT has been broadly left alone the only immediate changes are retrospective legislation on avoidance using offshore tax and reduced rate for charitable donations.

This year’s headlines are:

Avoidance using offshore tax

The Government will introduce retrospective legislation to amend the excluded property and settled property provisions in order to close an avoidance scheme involving the acquisition of interests in offshore excluded property trusts.  This will take effect from 21 March 2012.


The IHT nil-rate band is frozen until April 2015.  From then, it will be increased in line with the CPI.

Spouses and civil partners domiciled outside the UK

The Government intends to increase the IHT-exempt amount that a UK-domiciled person can transfer to a non-UK domiciled spouse or civil partner.  This has been £55,000 since 1981.  The Government also intends to allow a non-UK domiciled person with a UK domiciled spouse or civil partner to elect to be treated as UK domiciled, but this is subject to consultation on the technicalities.

Periodic charges on trusts

The Government will consult on the possibility of simplifying the calculation of the periodic charge and the exit charge when assets leave the trust.

Reduced rate for charitable donations

The Budget 2011 announced that for deaths on or after 6 April 2012, the Government will introduce legislation to provide for a lower rate of IHT of 36% where 10% of a deceased person’s net estate is left to charity.

Remember, you can see ACCA’s budget blog from yesterday, here


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