IHT Field check Date: 2024-04-18
IHT Field check
UK Inheritance Tax (IHT), and how a small-valued asset (e.g. £20,000 for a field) fits into the broader £1 million combined nil rate band for a deceased person’s estate.
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🧾 The £1 Million IHT Allowance — What It Means
The £1 million allowance is typically the combined total of two tax-free bands available to a married couple or civil partners:
Nil Rate Band (NRB) — £325,000 • This is available to everyone. • It can be transferred to a spouse if unused.
Residence Nil Rate Band (RNRB) — up to £175,000 • This applies only if you leave your main residence to direct descendants (children, grandchildren, etc.). • Also transferable between spouses.
👉 So a couple can potentially leave: • £325k + £175k = £500k each, • £1 million combined tax-free if all criteria are met.
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💼 How the £20,000 Field Fits Into This
If a £20,000 item (e.g. field or indeed car, artwork, cash, etc.) is part of the estate, here’s what happens:
✅ It Is Included in the Total Estate • All assets — even small ones — are added together. • The £20,000 counts against the total value of the estate.
📊 Example
Suppose a single person dies with: • House: £600,000 • Savings: £150,000 • Car: £20,000 • Personal items: £30,000 → Total estate: £800,000
If the full NRB (£325,000) and RNRB (£175,000) apply: • Total allowance: £500,000 • Taxable estate: £800,000 — £500,000 = £300,000 • IHT due: 40% × £300,000 = £120,000
The £20,000 car doesn’t receive separate treatment — it’s just part of the sum.
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👥 For Married Couples
If the first spouse dies and leaves everything to the other, no IHT is paid, and 100% of their allowances are preserved.
When the second spouse dies: • Full £1 million allowance may be available. • The £20,000 asset will still be part of the calculation.
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🧠 Summary
Item Effect £20,000 asset included in the estate’s total value £1m combined relief, Can shelter up to £1m total if criteria met Special treatment? No — the £20k is treated like any other asset
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If the £20,000 was a gift, it might have a different treatment.