If you think your estate might be worth more than the Inheritance Tax threshold (£325,000 for the 2013-14 tax year) when you die, there are some reliefs you can use to reduce your Inheritance Tax bill.
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Business Relief allows you to pass on some of the business assets in your estate free of Inheritance Tax. You can pass these assets on while you're still alive or as part of your will.
You can claim relief on property and buildings, or assets such as unlisted shares or machinery. Depending on the type of asset, they'll qualify for relief of either 50 or 100 per cent.
If you own agricultural property and it's part of a working farm, you can pass on some of your property free of Inheritance Tax in your will or before you die.
You can claim relief for farm property such as farmland. You can also claim relief for farm buildings if the size of the buildings is proportionate to the size of the farming activity. Relief is not available for farm equipment but it may qualify for Business Relief as a business asset.
Depending on the type of property, it will normally qualify for relief of 100 per cent. However, property rented out before 1 September 1995 usually only qualifies for relief of 50 per cent.
When you die, the beneficiaries of your woodland can ask that the value of the timber - but not the land - be excluded from your estate. However, when the timber is sold, the beneficiaries may have to pay Inheritance Tax on the value of the sale unless it also qualifies for relief.
If the woodland qualifies for Agricultural Relief, Woodland Relief may not be available and you should claim Agricultural Relief instead. Business Relief may be available on woodland that qualifies as a business asset.
Some assets may qualify for relief from Inheritance Tax under certain very strict and exceptional conditions. Examples of assets that may qualify include:
These conditions include an agreement to maintain and preserve the assets. They must also be made available to the general public to view.
Information about tax-exempt assets available for viewing by the public is held on a database (follow the link below to view tax-exempt heritage assets).
For more information on the relief you can contact the HM Revenue & Customs Heritage Team on Tel 0115 974 2514.
If you'd prefer to write the address is:
HM Revenue & Customs
Ferrers House, PO Box 38
Castle Meadow Road