Successive charges relief, also known as 'quick succession relief', is a relief which reduces the inheritance tax due on an estate where the value of that estate reflects the benefit of property received within the previous five years under a transfer on which tax was payable.
The tax payable on the second transfer is reduced by a percentage of
the tax paid on the first transfer. The percentage reduction is on a sliding
scale depending on how close together the two transfers were.
| Years between the two transfers | Percentage reduction |
|---|---|
| 1 year or less |
100 |
| 1 to 2 years | 80 |
| 2 to 3 years | 60 |
| 3 to 4 years | 40 |
| 4 to 5 years | 20 |
| Over 5 years | 0 |
Increase in estate / value of the earlier transfer x tax on the earlier transfer x %reduction
Aled died in May 2001 and left a legacy of £100,000 out of his estate of £300,000 to his sister Bronwen. Inheritance tax of £23,200 was paid on the death of Aled.
Bronwen died in July 2005, leaving her whole estate of £400,000 to her daughter Eluned. Inheritance tax is payable on Bronwen's estate. The inheritance tax due on Bronwen's estate will be reduced by successive charges relief.
Increase in Bronwen's estate / value of Aled's estate x tax on Aled's estate x 20% = 100,000 / £300,000 x £23,200 x 20% = £1,546.66 successive charges relief
| Bronwen's estate | £400,000.00
|
|
less threshold |
- £275,000.00 |
|
Total |
£125,000.00 |
|
at 40% = |
£ 50,000.00 |
|
less successive charges relief |
- £1,546.66 |
|
Tax due on Bronwen's estate |
£48,453.34 |
The successive charges relief is limited to the tax due on the second death. For example, if the second transfer is partly exempt because it passes to an exempt beneficiary such as a charity, there may be a smaller amount of tax to pay on the second death than the first death.
