| |
Inheritance
Tax
|
| The nil rate band for cumulative chargeable
transfers in the last seven years is £285,000
for gifts from 6 April 2006 onwards. Gifts above
that are charged at the following rates: |
| Chargeable
legacies on death |
40% |
| Gifts
within 7 years of death |
40%,
with reductions if over 3 years before death |
| Lifetime
chargeable gifts |
20%
if the donee pays the tax, 25% if the
donor pays |
|
| |
|
Inheritance Tax (IHT) on a deceased's
estate and on gifts within 7 years of death is generally
payable at the end of six months after the month
of death, but it must be paid before probate is
granted, and this may necessitate earlier settlement.
IHT on chargeable lifetime gifts is payable on the
later of six months after the month of transfer
or 30 April in the next tax year. |
| |
|
The following transfers are exempt from
IHT:
* the first £3,000 gifted
in a tax year (unused limit may be carried forward
for one year)
* small gifts of up to
£250 to one person in a year
*
normal expenditure out of income
*
gifts between husband and wife, unless the donor
is domiciled in the UK and the recipient is not
* gifts between individuals more than 7
years before the donor's death (until the donor
dies such gifts are left out of account as 'potentially
exempt')
* gifts in consideration
of marriage - £5,000 from a parent, £2,500
from a grandparent or a party to the marriage, £1,000
from others
Most business and agricultural property enjoys a
100% relief once it has been owned for two years,
although some types of property are relieved only
at 50%, and it is important to meet all the
conditions. |
| |
|
| From 6 April 2005, an income tax charge
applies to certain arrangements which remove assets
from an IHT-chargeable estate but allow the former
owner to use or enjoy them. |
|
|
