Inheritance Tax
| Transfers on or
Within Seven Years Before Death |
| |
2005/06 |
2004/05 |
| Nil rate band
to |
£275,000 |
£263,000 |
| Rate of tax on
balance |
40% |
40% |
| Chargeable lifetime
transfers |
20% |
20% |
|
All lifetime transfers not covered by exemptions and made within
seven years of death will be added back into the estate for the
purpose of calculating the tax payable. This will then be reduced
by taper relief.
| Charge
on Gifts Within 7 Years of Death |
| Years before death |
0-3 |
3-4 |
4-5 |
5-6 |
6-7 |
| Tax reduced by |
0% |
20% |
40% |
60% |
80% |
|
| Main Reliefs |
| Business
property: |
| - business or
interest therein |
100% |
| - qualifying shareholders
in unquoted* companies |
100% |
| - land, buildings,
machinery, or plant used by transferor's controlled company
or partnership |
50% |
| Agricultural property |
50% or 100% |
| *Unquoted companies
include those listed on AIM |
|
Main Exemptions
- Most transfers between spouses.
- The first £3,000 of lifetime transfers in any tax year (husband
and wife each have own exemption) plus any unused balance from
previous year.
- Gifts of up to but not exceeding £250p.a to any number of persons.
- Gifts in consideration of marriage to bride and/or groom of:
up to £5,000 by a parent, up to £2,500 by a grandparent, or up
to £1,000 by any other person.
- Gifts made out of income that form part of normal expenditure
and do not reduce the standard of living.
- Gifts to charities, whether made during lifetime or on death.
|
