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2005/06 Rates and Allowances
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Inheritance Tax
| Transfers on or Within Seven Years Before Death |
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2005/06 |
2004/05 |
| Nil rate band to |
£275,000 |
£263,000 |
| 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 will 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% |
Inheritance Tax Calculator - Use our calculator to find out how much tax your estate will pay - and then contact us to discuss how this can be avoided.
| 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
- Most transfers between spouses.
- The first £3,000 of lifetime transfers in any tax year (husband and wife each have own exemption) 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 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.
- 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.
Did you know?
- That the Government is expecting to receive £3.4 billion from inheritance tax. This represents an increase of £500 million (14.7%) compared with the previous year.
- The estimated number of taxpaying estates this year is 37,000 out of a total of approximately 615,000 - make sure you're not one of them!
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