A working-age single homeowner<\/a> in England with an average-priced home of \u00a3290,395 and a moderate pension pot of \u00a3415,000 could face an IHT bill of \u00a382,158, according to calculations from Quilter.<\/p>\nChanges made by Rachel Reeves in the last autumn Budget mean unspent pension savings will now count towards a person\u2019s estate for IHT purposes regardless of age at death.<\/p>\n
New FeatureIn ShortQuick Stories. Same trusted journalism.<\/p>\n
Here, The i Paper takes a look at how inheritance tax in the UK compares with other countries.<\/p>\n
How IHT is applied<\/p>\n
The UK is one of only four OECD countries to tax the estates of deceased donors, according to the IFS.<\/p>\n
Other countries tax the recipients.<\/p>\n
Most OECD countries apply progressive IHT rates on recipients. This is different from the UK, which is one of only seven countries to apply a flat rate above an exemption threshold.<\/p>\n
Fifteen countries surveyed by the OECD applied progressive rates \u2013 a rate that increases as the taxable amount increases.<\/p>\n
In Belgium, the rate is up to 80 per cent.<\/p>\n<\/p>\n
Exemptions ahead of death<\/p>\n
The UK completely exempts all gifts from taxation if they are made far enough in advance of death, which is unusual.<\/p>\n
Other countries treat gifts before death differently from inheritances and implemented tax-free thresholds. <\/p>\n
In the UK, gifts must be made seven years before death to be exempt from IHT.<\/p>\n
This is longer than in other countries that have similar restrictions, which are typically applicable for one to three years.<\/p>\n
Exemption amount and rates<\/p>\n
The UK\u2019s exemption amount is higher than in most other countries but the tax rate of 40 per cent is also higher. <\/p>\n
Among OECD countries, only Italy and the US have higher exemption thresholds. <\/p>\n
Compared with other countries, very few people in the UK pay IHT.<\/p>\n
By contrast, in Belgium, 48 per cent of inheritances attracted taxes, the OECD found. <\/p>\n
The UK is in the upper half of OECD countries in terms of the revenues received from IHT as a proportion of GDP.<\/p>\n
Revenues are substantially higher than in the US or Ireland but less than half of the amounts raised by Belgium, France and South Korea.<\/p>\n
Austria, Portugal, Sweden and Norway all abolished their inheritance taxes within the last 20 years.<\/p>\n
Italy and the US have reduced the scope or rate of the tax, while in Germany substantial new reliefs were introduced.<\/p>\n","protected":false},"excerpt":{"rendered":"Unlike other nations, the UK completely exempts all gifts from taxation if they are made far enough in…\n","protected":false},"author":2,"featured_media":82141,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[14],"tags":[64,63,99,186,36756,184,185,4961],"class_list":{"0":"post-82140","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-personal-finance","8":"tag-au","9":"tag-australia","10":"tag-business","11":"tag-finance","12":"tag-inheritance-tax","13":"tag-personal-finance","14":"tag-personalfinance","15":"tag-tax"},"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts\/82140","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/comments?post=82140"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts\/82140\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/media\/82141"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/media?parent=82140"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/categories?post=82140"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/tags?post=82140"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}