Rates of Inheritance Tax (IHT) 2005/2006

• HT is payable on transfers made during an individual's lifetime or on death, including gifts made within seven years of death.
• If IHT is payable on gifts made within seven years, then it is the recipient who has to pay the tax, not the Estate. Professional advice should be sought on all IHT planning involving the use of PETs.
• Lifetimes rates are exclusive to transfers into discretionary trusts.

Rates quoted are for the tax year 2005/6.

It has been announced that the following future ‘Nil Rate Bands’ will apply:

2006/2007 - £285,000
2007/2008 - £300,000

Taper Relief

• Taper Relief is available for use to help reduce the full IHT payable on Potentially Exempt Transfers (PETs), where the gift was made within seven years of death, and where the PET exceeds the IHT nil-rate band applicable at death.
• Taper Relief can also be used to reduce the imposition of IHT death rates on those Lifetime Chargeable Transfers that have occurred within seven years of death (but can never be used to reduce any lifetime rate IHT already paid).
• There is an interplay between PETs and Lifetime Chargeable Transfers made within seven years of death. Professional advice should be sought here.

Risk Warning
The information given about tax relief and bases is based on current legislation which, you will appreciate, may change. You will also appreciate that the value of any tax relief will depend upon your particular circumstances.

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