Budget 2008

Inheritance Tax - Budget 2008 - GT

Inheritance Tax

Cumulative transfers on death

After 5 April 2008 During 2007/2008 Rate
£ £ %
1-312,000* 1-300,000* nil
over 312,000 over 300,000 40

 

Transfers within seven years of death
Years

% of charge at death
0-3 100
3-4 80
4-5 60
5-6 40
6-7 20


Other chargeable lifetime transfers

50% of death rate.

Main exemptions and reliefs
  £
Annual gifts per donor† 3,000
Small gifts per donee per annum 250
Gifts in consideration of marriage/civil partnership
– parent 5,000
– grandparent or other direct lineal ancestor 2,500
– between the parties to the marriage/civil partnership 2,500
– other 1,000
Transfers between spouses/civil partners exempt‡
Normal expenditure out of income exempt§
Gifts to charities, political parties, for national purposes exempt§

* On death of surviving spouse or civil partner post 8 October 2007, may be increased by the additional percentage of nil-rate band unused on earlier death of spouse or civil partner. Special rules apply where the deceased has more than one former spouse or civil partner.
† May be carried forward 1 tax year and used only after subsequent year exemption applied.
‡ Restricted to £55,000 where the transferor but not the transferee is domiciled in the UK.
§ Detailed conditions apply.

Business property relief*

  • Relief available in respect of transfers during lifetime and on death†.
  • 100%relief available in respect of the gifting of:
    • unquoted shares in a trading company
    • securities in an unquoted trading company controlled by the transferor
    • quoted shares or securities in a trading company controlled by the transferor
    • a business or an interest therein.
  • 50%relief available in respect of land, buildings, plant or machinery used by the transferor’s trading company or a trading partnership in
    which he is a partner.
  • Two year minimum holding period required‡


Agricultural property relief*

  • Relief available in respect of transfers during lifetime and on death†.
  • 100%relief available in respect of the gifting of agricultural land with vacant possession or subject to an agricultural tenancy taken out after 1 September 1995.
  • 50%relief available in respect of other interests in land.
  • To qualify for relief land must be occupied for at least 2 years or owned for at least 7 years‡.

* Complex rules apply.
† Asset (or replacement asset if certain conditions are met) must still be held on death of donor, if within 7 years of a lifetime gift, for relief to be available.
‡ Replacement asset rules may apply.

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