Inheritance Tax
| Transfers on or Within Seven Years Before Death |
| |
2007/08 |
2006/07 |
| Nil rate band to |
£300,000 |
£285,000 |
| 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 may 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 |
The Government has announced the IHT nil rate bands for the following tax years:
- 2008/09 - £312,000
- 2009/10 - £325,000
- 2010/11 - £350,000
- Most transfers between spouses and civil partners.
- The first £3,000 of lifetime transfers in any tax year 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 or civil partnership: 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.
- Gifts to political parties
That the Government expect to raise £4 billion of its £553 billion tax generating programme from inheritance tax. Significantly this is an increase of over 11% while currently only one in six estates appear liable for inheritance tax it is estimated that more than 25% of households have a liability to inheritance tax.
You may currently rank for business property relief, but what will happen when you no longer own your business? This accounts for much less than 1% of Government taxes, but certainly is a tax liability that you should seek to avoid. Please contact us to discuss.
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2007/08 Rates and Allowances
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