Inheritance Tax (death duty)
Inheritance tax, also known as death duty, is paid on the estates of the deceased providing the value of the estate is in excess of £325,000.
Inheritance tax is payable at the rate of 40 per cent of the value of the estate above £325,000, and gifts made by the deceased person within the preceding seven years ('lifetime gifts') are taken into account in calculating the tax payable.
There are a number of exemptions from inheritance tax, notably including assets left to a spouse, a political party, or a charity, as well as some as agricultural and business assets.
Heritage assets may be given an exemption from the tax provided they continue to be appropriately maintained and made accessible to the public.
In 2003-04, inheritance tax was paid by 30,000 estates, representing a small proportion of the over 600,000 people who die each year, and generated some £2.5 billion for the Inland Revenue. However, rocketing house prices have seen more and more people fall within this tax's umbrella.