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Inheritance Tax
Rates
The nil rate band for transfers after 5 April 2008 rises, as previously announced, from £300,000 to £312,000. Rates of tax remain unchanged at 40% (death transfers) and 20% (lifetime chargeable transfers).
Transfer of nil rate band
The Budget confirms the announcement from the October Pre-Budget Report that the nil rate band will be effectively transferable between husband and wife. Where one spouse has died with a chargeable estate for IHT of less than the nil rate band at the time, the unused proportion will be added to the nil rate band of the surviving spouse on the second death. This relief applies where the survivor dies on or after 9 October 2007, whenever the first spouse died.
This means that one of the main IHT planning devices of the past 20 years – the nil rate band discretionary will trust – may no longer be required.
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