As a general rule, inheritance tax (IHT) is collected from a person’s estate when they die and can also be payable during a person’s lifetime on certain trusts and gifts. There is normally no tax to be paid if the value of the estate is below the IHT nil rate threshold of £325,000. There is also a new IHT main residence nil-rate band (RNRB) that was introduced in April 2017. The RNRB will ultimately allow for a £175,000 per person transferable allowance for married couples and civil partners when their qualifying main residence is passed down to children after their death. The RNRB is in addition to the £325,000 IHT threshold.The remaining amount after deducting IHT exemptions, reliefs and the nil rate band is liable to IHT at 40%. A reduced rate of IHT of 36% applies where 10% or more of a deceased’s net estate is left to charity. In some circumstances, the inheritor may be liable to pay IHT if the deceased person’s estate can’t or doesn’t pay. There can also be IHT payable by the inheritor, if an inheritance is put into a trust that doesn’t pay the IHT due. HMRC will contact inheritors that are required to pay IHT.Planning noteThe inheritor is also liable to pay tax on any profit they make from inherited cash or assets. For example, where a property is inherited and then rented – income tax would be due on the rental income (subject to the usual rules). Likewise, if assets are inherited and subsequently sold, capital gains tax would be due on the increase in value since the person died.There are legitimate ways to minimise any IHT due to the Exchequer. These can include giving away surplus income, making gifts before you die (known as Potentially Exempt Transfers) and giving gifts to charity. We would be happy to help you look at your estate planning options.