30 Sep 2010

Inheritance Tax

Inheritance tax threshold

 2009-102010-11
Individual inheritance tax allowance£325,000£325,000

As announced in Budget 2009, the individual nil-rate band will be held at £325,000 in 2010-11.  This gives an effective £650,000 for married couples and civil partners. The value of estates over and above the allowance is taxed at 40 per cent.   In previous Budgets it was forecast that the rates for 2010-2011 would be £350,000 for individuals or £700,000 for married couples and civil partners.

Rates

Gross transfers on death%
Up to cumulative chargeable transfer limitNil
Over cumulative chargeable transfer limit40
Gross lifetime transfersÊ
Up to cumulative chargeable transfer limitNil
Over cumulative chargeable transfer limit20

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- charitiesExempt
- political partiesExempt

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 - 3100
3 - 480
4 - 560
5 - 640
6 - 720

Agricultural and business property relief   – between 100 and 50 %


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