Transfers on or Within Seven Years Before Death

2002/03

Nil rate band to
£250,000

Rate of tax on balance
40%

Chargeable lifetime transfers
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 may then be reduced by taper relief.

Charge on Gifts Within 7 Years of Death

Years before death
0-3 : Tax reduced by 0%
3-4 : 20%
4-5 : 40%
5-6 : 60%
6-7 : 80%

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

To UK domiciled spouse - exempt.
To non UK domiciled spouse - £55,000.
Annual exemption - per donor - £3,000.
Small gifts per donee - £250 p.a.
Gifts in consideration of marriage to bride and/or groom as follows: up to £5,000 by a parent, up to £2,500 by a grandparent, or up to £1,000 by any other person.
Normal gifts out of income - no limit.
Charities - exempt

Did you know?

That the Treasury raises over £2 billion in revenues from inheritance tax.