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Inheritance Tax

Inheritance Tax 2015-16 2014-15
Nil rate band for individuals* £325,000 £325,000
Thereafter - lifetime gifts** 20% 20%
- lower rate on death*** 36% 36%
- on death 40% 40%

* Unused nil rate band can be used by surviving spouse or civil partner. This band is currently frozen until April 2021.

** Increased to 40%, subject to tapering relief, on gifts made between 3 and 7 years pre death. Certain lifetime gifts are exempt. Special rules for business property.

*** A lower rate applies where 10% or more of the net estate is left to charity.

**** If a spouse or civil partner downsizes or ceases to own a home on or after 8 July 2015 they may still qualify for the new main residence nil-rate band when it becomes available from April 2017. To qualify, assets of an equivalent value, up to the value of the new nil rate band, need to be passed to direct descendants on death of the relevant spouse or civil partner.

Years before death 0-3 03-Apr 04-May 05-Jun 06-Jul
% of death charge 100% 80% 60% 40% 20%
Main exempt lifetime gifts  
Recurring annual gifts out of surplus income unlimited
Annual gifts out of capital (with one year carry forward if unused) £3,000
Small gifts (per recipient) £250
Parental gift on marriage £5,000
Grandparent or party to marriage £2,500
Other gifts on marriage (per donor) £1,000
Business Property Relief  
Shares in unquoted companies (including USM/AIM stocks) 100%
Shares in quoted companies  
Shareholding upto 50% none
Shareholding over 50% 50%
Unincorporated business or interest in a business 100%
Land, buildings, plant and machinery used in the deceased’s business/company 50%

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