The “nil rate band”, which is the first share of collective transfers of value is tax-free. This limit is presently set at £312,000 for the tax year 2008 – 2009. Despite the fact that this limit is increased yearly, it was recently unsuccessful in keeping up with the inflation of house prices. As a result, approximately 6,000,000 homes presently fall within the span of inheritance tax. Over this limit, the rate is generally 40% on death.

Probate will not be granted until the inheritance tax is paid by the beneficiaries or those who inherited the estate of the deceased.

Transfers of value between spouses residing in UK are not subject to taxation. The latest modifications to the amount of tax imply that nil rate bands will be valid for transfer between spouses to lessen this liability. This is something which could only be done before by setting up complicated trusts.

The gifts which have been made more than sever years before the death are tax-free. If however, these gifts have been made between three and seven years prior to death, a lessened inheritance tax amount is enforced. There are some significant exemptions to this conduct. The most important of all is rule which says that a gift does not take effect for purposes of inheritance tax of the giver profits from the property in whatever way after the gift has been made. An example of this is when a house if gifted but the giver still continues to live in it.