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Inheritance Tax
| Transfers on or Within Seven Years Before Death |
| |
2004/05 |
2003/04 |
| Nil rate band to |
£263,000 |
£255,000 |
| 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 |
|
Main Exemptions
- Transfers to UK domiciled spouse - exempt.
- Transfers to non UK domiciled spouse - £55,000.
- Annual exemption - per donor - £3,000.
- Small gifts per donee - £250 p.a.
- 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.
- Normal gifts out of income - no limit.
- Gifts to charities - exempt
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