Inheritance Tax (United Kingdom) - Nil Rate Band Thresholds - Transferable To Surviving Spouse(s)

Transferable To Surviving Spouse(s)

A spouse exemption has long existed in respect of Inheritance Tax as a matter of public policy. From 9 October 2007, a transferable nil rate band policy was introduced that allows a surviving spouse (who has lost a husband/wife/civil partner) to benefit from an additional percentage of nil rate band (that unused) therefore providing up to a 200% nil rate band for that person, however that person may have already have used their nil rate band for instance to provide for relatives less likely to face care charges under the Community Care Act 1990. For the 2010/2011 tax year, the IHT rate was 0% on the first £325,000 (the "nil-rate band"), and 40% on the rest of the value, at death, of an individual's taxable estate (loosely speaking net assets at death as the tax provides for a degree of retro-activity as at date of death).

The tax is only payable on the value of an estate above the nil rate band.

In the 2007 budget report the Chancellor of the Exchequer announced that the nil rate band was to rise to £350,000 by 2010. This plan was said to take into account the sharp rise in house prices in the United Kingdom over the previous few years. This increase was cancelled by the Chancellor in December 2009 and while in the 2008–2012 global recession has been maintained at £325,000 until at least the end of the tax year ending 5 April 2015.