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ACCA Applied Skills · Taxation (UK) · The use of exemptions in deferring and minimising inheritance tax liabilities

Peter died on 10 May 2026. His will left his entire estate of £500,000 to his wife, Anna, who is UK domiciled. Peter made no lifetime transfers. What is the inheritance tax payable on Peter's death?

The inheritance tax payable is nil. The whole estate passes to Peter's UK-domiciled spouse, and transfers between spouses on death are fully exempt with no upper limit, so no chargeable estate remains and the nil rate band is not even needed.

  1. A£0Correct
  2. B£70,000
  3. C£200,000
  4. D£27,000

Explanation

A transfer on death to a UK-domiciled spouse is fully exempt under the spouse exemption, so no tax arises. The £70,000 option wrongly applies 40% to the £175,000 above the nil rate band, and £200,000 applies 40% to the full estate.

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