Inheritance Tax (IHT) Nil Rate Band - December 2007
New legislation is to be introduced to allow a claim to be made to transfer any unused IHT nil-rate band on a person's death to the estate of their surviving spouse who dies on or after 9th October 2007. This will apply where the IHT nil-rate band of the first deceased spouse was not fully used in calculating the IHT liability of their estate. When the surviving spouse dies, the unused amount may be added to their own nil rate band.
Under current law, the estate left by someone who dies is entitled to an amount knows as the IHT nil-rate band which is chargeable to IHT at 0%. Any value above the nil-rate band is charged at 40%. The nil-rate band in 2007/08 is £300,000.
Transfers of property between spouses are generally exempt from IHT. This means that someone who dies leaving some or all of their property to their spouse may not have fully used up their nil-rate band. The new rules will allow any nil-rate band unused on the first death to be used when the surviving spouse dies.
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