Inheritance Tax
| 2005-06 | 2004-05 | |||
| Nil rate band | £275,000 | £263,000 | ||
| Rate of tax on balance | ||||
| Chargeable lifeline transfers | 20% | 20% | ||
| Transfers on, or within 7 years of, death | 40% | 40% | ||
| All lifetime transfers not covered by exemptions and made within 7 years of death will be added back into the estate for the purpose of calculating the tax payable. | ||||
| This will then be reduced: | |||||
|---|---|---|---|---|---|
| Years before death | 0-3 | 3-4 | 4-5 | 5-6 | 6-7 |
| Tax reduced by | 0% | 20% | 40% | 60% | 80% |
| 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 the previous year + Gifts made out of income that form part of normal expenditure and do not reduce the standard of living + Gifts in consideration of marriage to bride an/or groom of up to £5,000 by a parent, £2,500 by a grandparent, or £1,000 by any other person + Gifts to charities, whether made during lifetime or on death. | |||||