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Contents

Legislation
Inheritance Tax Act 1984

Crossheading Rates

  • Section 7 Rates.
  • Section 8 Indexation of rate bands.
  • Section 8A Transfer of unused nil-rate band between spouses and civil partners
  • Section 8B Claims under section 8A
  • Section 8C Section 8A and subsequent charges
  • Section 8D Extra nil-rate band on death if interest in home goes to descendants etc
  • Section 8E Residence nil-rate amount: interest in home goes to descendants etc
  • Section 8F Residence nil-rate amount: no interest in home goes to descendants etc
  • Section 8FA Downsizing addition: entitlement: low-value death interest in home
  • Section 8FB Downsizing addition: entitlement: no residential interest at death
  • Section 8FC Downsizing addition: effect: section 8E case
  • Section 8FD Downsizing addition: effect: section 8F case
  • Section 8FE Calculation of lost relievable amount
  • Section 8G Meaning of “brought-forward allowance”
  • Section 8H Meaning of “qualifying residential interest” , “qualifying former residential interest” and “residential property interest”
  • Section 8HA Qualifying former residential interest”: interests in possession
  • Section 8J Meaning of “inherited”
  • Section 8K Meaning of “closely inherited”
  • Section 8L Claims for brought-forward allowance and downsizing addition
  • Section 8M Residence nil-rate amount: cases involving conditional exemption
  • Section 9 Transitional provisions on reduction of tax.
  1. Rates
  2. Rates.

Section 7 | Rates.

From legislation.gov.uk

(1)Subject to subsections (2), (4) and (5) below and to section 8D and Schedule 1A the tax charged on the value transferred by a chargeable transfer made by any transferor shall be charged at the following rate or rates, that is to say—F1F2F3

(a)if the transfer is the first chargeable transfer made by that transferor in the period of seven years ending with the date of the transfer, at the rate or rates applicable to that value under the . . . Table in Schedule 1 to this Act;F4F5

(b)in any other case, at the rate or rates applicable under that Table to such part of the aggregate of—

(i)that value, and

(ii)the values transferred by previous chargeable transfers made by him in that period,

as is the highest part of that aggregate and is equal to that value.

(2)Except as provided by subsection (4) below, the tax charged on the value transferred by a chargeable transfer made before the death of the transferor shall be charged at one-half of the rate or rates referred to in subsection (1) above.F6

(3)In the Table in Schedule 1 to this Act any rate shown in the third column is that applicable to such portion of the value concerned as exceeds the lower limit shown in the first column but does not exceed the upper limit (if any) shown in the second column.F7

(4)Subject to subsection (5) below, subsection (2) above does not apply in the case of a chargeable transfer made at any time within the period of seven years ending with the death of the transferor but, in the case of a chargeable transfer made within that period but more than three years before the death, the tax charged on the value transferred shall be charged at the following percentage of the rate or rates referred to in subsection (1) above—F8

(a)where the transfer is made more than three but not more than four years before the death, 80 per cent;F8

(b)where the transfer is made more than four but not more than five years before the death, 60 per cent;F8

(c)where the transfer is made more than five but not more than six years before the death, 40 per cent; andF8

(d)where the transfer is made more than six but not more than seven years before the death, 20 per cent.F8

(5)If, in the case of a chargeable transfer made before the death of the transferor, the tax which would fall to be charged in accordance with subsection (4) above is less than the tax which would have been chargeable (in accordance with subsection (2) above) if the transferor had not died within the period of seven years beginning with the date of the transfer, subsection (4) above shall not apply in the case of that transfer.F8

Notes

  1. F1

    Finance Act 1986 Sch. 19, para. 2(1)(a),with effect from 18March 1986.

  2. F2

    Words in s. 7(1) inserted (with effect in accordance with Sch. 33 para. 10(1) of the amending Act) by Finance Act 2012 (c. 14), Sch. 33 para. 3

  3. F3

    Words in s. 7(1) inserted (18.11.2015) by Finance (No. 2) Act 2015 (c. 33), s. 9(2)

  4. F4

    Finance Act 1986 Sch. 19, para. 2(1)(b),with effect from 18March 1986.Originally

    “ten years”.

  5. F5

    Repealed by Finance Act 1986 s. 101(3)and Sch. 19, para. 2(1)(c),with effect from 18March 1986.

  6. F6

    Finance Act 1986 Sch. 19, para. 2(2),with effect from 18March 1986.Originally

    “(2) Except as otherwise provided, the first Table in Schedule 1 to this Act is the appropriate Table for a transfer made on or at any time within three years of the death of the transferor, and the second Table in that Schedule is the appropriate Table for any other transfer.”

  7. F7

    Finance Act 1986 Sch. 19, para. 2(3),with effect from 18March 1986.Originally

    “each of the Tables”.

  8. F8

    Finance Act 1986 Sch. 19, para. 2(4),with effect from 18March 1986.

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