Inheritance tax rates
The following inheritance tax rates apply.
| Rates | 2007/2008 | 2006/2007 |
|---|---|---|
| Nil rate band | up to £300,000 | up to £285,000 |
| Chargeable at 40% | above £300,000 | above £285,000 |
A Potentially Exempt Transfer (PET) normally has IHT due if death occurs within seven years of the gift being made.
Tax is charged at 20% where tax is payable on a lifetime gift (other than those taxable only because they are made within seven years of death).
Inheritance tax relief
The following inheritance tax taper relief is available.
| Time from gift to death | Reduction in tax payable on PET |
|---|---|
| 0 to 3 years | nil |
| 3 to 4 years | 20% |
| 4 to 5 years | 40% |
| 5 to 6 years | 60% |
| 7 years or over | 100% |