Inheritance Tax

Rates

 

 

Rates of tax remain unchanged at 40% (death transfers) and 20% (lifetime chargeable transfers). The nil rate band of £325,000 is frozen until 2015.

 

 

Charitable giving

 

 

From 6 April 2012, where a person leaves 10% of their estate to charity in their will, the rate of IHT on what is left will be reduced from 40% to 36%. For example, on an estate of £1m, IHT is at present 40% of £675,000 (£270,000), and the beneficiaries will receive £730,000. Under the proposal, if £100,000 is left to charity, the IHT on the £900,000 balance will be 36% of £575,000 (£207,000) and the beneficiaries will receive £693,000. The charity will receive £100,000 but the beneficiaries will only get £37,000 less.