Inheritance Tax Thresholds

UK Inheritance Tax Thresholds.

Inheritance Tax thresholds are reviewed by the Chancellor every year and are currently fixed at £325,000 until 5th April 2017. Careful planning can avoid the issue of inheritance tax thresholds being a problem, as long as you start in good time. That is why we exist, to ensure your family members get lions share of your assets when you die, rather than the Taxman.

The Inheritance Tax threshold is the “nil rate band”amount above which Inheritance Tax is charged at 40%. Needless to say things are not that straightforward!  Before the Nil Rate Band allowance available can be calculated all sorts of other things have to be reviewed. However, there is no inheritance tax payable on amounts below the available inheritance tax threshold on death.

Available Inheritance Tax thresholds can be reduced, for example by:

  • Gifts made with “reservation of benefit.” Typical examples would be a house “given away” or put in trust which you still live in, or a holiday home “given away” which you still use.
  • Gifts over the tax free allowances made in the preceding (normally) 7 years.
  • There are issues if you are not domiciled in the UK – i.e. you are not British or have habitually lived abroad.  Domicile is an extremely complex area.
  • Gifts to registered Charities or Community Amateur Sports Club do not reduce the available inheritance tax threshold.  However, if the gift is substantial, it is possible that your estate may be tax at the reduced rate of 36%.  The rules are wonderfully complex, as befits HMRC!
From To Threshold/nil rate band
6 April 2009 5 April 2017 £325,000.
6 April 2008 5 April 2009 £312,000
6 April 2007 5 April 2008 £300,000
6 April 2006 5 April 2007 £285,000.
6 April 2005 5 April 2006 £275,000
6 April 2004 5 April 2005 £263,000.
6 April 2003 5 April 2004 £255,000
6 April 2002 5 April 2003 £250,000
6 April 2001. 5 April 2002 £242,000
6 April 2000 5 April 2001 £234,000
6 April 1999 5 April 2000 £231,000
6 April 1998 5 April 1999 £223,000
6 April 1997 5 April 1998 £215,000
6 April 1996 5 April 1997 £200,000
6 April 1995. 5 April 1996 £154,000
10 March 1992 5 April 1995 £150,000
6 April 1991 9 March 1992 £140,000.
6 April 1990 5 April 1991 £128,000
6 April 1989 5 April 1990 £118,000
15 March 1988 5 April 1989 £110,000
17 March 1987 14 March 1988 £90,000
18 March 1986 16 March 1987 £71,000.

Inheritance Tax Thresholds 1985 to 2017.

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