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Inheritance Tax
Inheritance tax threshold
| 2008-09 | 2009-10 | ||
|
Individual inheritance tax allowance |
£312,000 |
+£13,000 |
£325,000 |
As announced in Budget 2006, the inheritance tax allowance increased in 2009-10 to £325,000 for individuals or £650,000 for married couples and civil partners. The value of estates over and above the allowance is taxed at 40 per cent. The proportion of estates left on death in 2009-10 which are expected to be liable for inheritance tax is 2 per cent
Rates
|
Gross transfers on death |
% |
|
Up to cumulative chargeable transfer limit |
Nil |
|
Over cumulative chargeable transfer limit |
40 |
|
Gross lifetime transfers |
|
|
Up to cumulative chargeable transfer limit |
Nil |
|
Over cumulative chargeable transfer limit |
20 |
Exemptions and reliefs
|
Exemptions |
£ |
|
|
Annual |
£3,000 |
|
|
Small gift to same person |
£250 |
|
|
Marriage |
- by parent |
£5,000 |
|
|
- by remoter ancestor |
£2,500
|
|
|
- by a party to marriage |
£2,500 |
|
|
- by others |
£1,000 |
|
Spouses with separate domicile |
£55,000 |
|
|
Gifts to |
- charities |
Exempt |
|
|
- political parties |
Exempt |
Taper relief
Transfers on or within seven years of death are chargeable, but the tax is tapered as follows:
|
No of years between gift and death |
% of full charge |
|
0 - 3 |
100 |
|
3 - 4 |
80 |
|
4 - 5 |
60 |
|
5 - 6 |
40 |
|
6 - 7 |
20 |
Agricultural and business property relief - between 100 and 50 %
As announced in Budgets 2006 and 2007, the inheritance tax allowance will be increased by more than statutory indexation in each of the next three years. The allowance for the tax year 2008-09 is £312,000 for individuals or £624,000 for married couples and civil partners; for 2009-10 it will be £325,000 for individuals or £650,000 for married couples and civil partners; and for 2010-11 it will be £350,000 for individuals or £700,000 for married couples and civil partners. The value of estates over and above the allowance is taxed at 40 per cent. The proportion of estates forecast to pay inheritance tax in 2008-09 is 5%.