Inheritance Tax

 Financial Year2012/132011/12
Single persons nil rate band£1 – £325,000£1 – £325,000
Single persons 40% bandover £325,000over £325,000
Married couples or civil partnerships allowance nil rate band £650,000£650,000 
Gifts to charitiesExempt Exempt 
Small gifts to same person£250£250
Marriage/civil partnership gifts by:
  • Parent
£5,000£5,000
  • Grandparent/party
£2,500£2,500
  • Other person
£1,000£1,000

From 6 April 2012 a reduced rate of IHT of 36% will be introduced where 10% or more of the net estate is left to charity.

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. Tax attributable to such transfers is then reduced:

Years before death0-33-44-55-66-7
Tax reduced by0%20%40%60%80%

 

Main Reliefs:

Business property relief:2014/152013/14
Business or interest in a business and transfer if unquoted shareholdings100%100%
Transfers out of a controlling shareholding in quoted companies, land and buildings, plant and machinery used in a qualifying company or partnership50%50%


Main Exemptions

  1. Most transfers between spouses and civil partners.
  2. The first £3,000 of lifetime transfers in any tax year plus any unused balance from previous year.
  3. Gifts of up to but not exceeding £250 p.a. to any number of persons.
  4. Gifts in consideration of marriage or civil partnership of: up to £5,000 by a parent, up to £2,500 by a grandparent, or up to £1,000 by any other person.
  5. Gifts made out of income that form part of normal expenditure and do not reduce the standard of living.
  6. Gifts to charities, whether made during lifetime or on death.