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Inheritance Tax Act 1984

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Commencement Orders bringing legislation that affects this Act into force:

RatesE+W+S+N.I.

7 Rates.E+W+S+N.I.

(1)[F1Subject to subsections (2), (4) and (5) below] 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—

(a)if the transfer is the first chargeable transfer made by that transferor in the period of [F2seven years] ending with the date of the transfer, at the rate or rates applicable to that value under the . . . F3 Table in Schedule 1 to this Act;

(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.

[F4(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.]

(3)In [F5the 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.

[F6(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—

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

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

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

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

(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.]

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Annotations are used to give authority for changes and other effects on the legislation you are viewing and to convey editorial information. They appear at the foot of the relevant provision or under the associated heading. Annotations are categorised by annotation type, such as F-notes for textual amendments and I-notes for commencement information (a full list can be found in the Editorial Practice Guide). Each annotation is identified by a sequential reference number. For F-notes, M-notes and X-notes, the number also appears in bold superscript at the relevant location in the text. All annotations contain links to the affecting legislation.

Amendments (Textual)

F1Finance Act 1986 Sch. 19, para. 2(1)(a),with effect from 18March 1986.

F2Finance Act 1986 Sch. 19, para. 2(1)(b),with effect from 18March 1986.Originally

“ten years”.

F3 Repealed by Finance Act 1986 s. 101(3)and Sch. 19, para. 2(1)(c),with effect from 18March 1986.

F4Finance 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.”

F5Finance Act 1986 Sch. 19, para. 2(3),with effect from 18March 1986.Originally

“each of the Tables”.

F6Finance Act 1986 Sch. 19, para. 2(4),with effect from 18March 1986.

8 Indexation of rate bands.E+W+S+N.I.

(1)If the retail prices index for the month of [F7September in 1993] or any later year is higher than it was for the [F7previous September], then, unless Parliament otherwise determines, section 7 above and Schedule 1 to this Act shall apply to chargeable transfers made on or after 6th April in the following year with the substitution of [F8a new Table for the Table] applying (whether by virtue of this section or otherwise) to earlier chargeable transfers.

(1A). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F9

(2)The new [F10Table] shall differ from the [F10Table] it replaces in that for each of the amounts specified in the first and second columns there shall be substituted amounts arrived at by increasing the previous amounts by the same percentage as the percentage increase in the retail prices index and, if the result is not a multiple of £1,000, rounding it up to the nearest amount which is such a multiple.

(3)The references in this section to the retail prices index are references to the general index of retail prices (for all items) published by the [F11Office for National Statistics]; and if that index is not published for a month of [F7September] those references shall be construed as references to any substituted index or index figures published by [F12that Office].

(4)The Treasury shall before 6th April [F71994] and each subsequent 6th April make an order specifying the amounts which by virtue of this section will be treated, in relation to chargeable transfers on or after that date, as specified in the [F13Table] in Schedule 1 to this Act; and any such order shall be made by statutory instrument.

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Annotations are used to give authority for changes and other effects on the legislation you are viewing and to convey editorial information. They appear at the foot of the relevant provision or under the associated heading. Annotations are categorised by annotation type, such as F-notes for textual amendments and I-notes for commencement information (a full list can be found in the Editorial Practice Guide). Each annotation is identified by a sequential reference number. For F-notes, M-notes and X-notes, the number also appears in bold superscript at the relevant location in the text. All annotations contain links to the affecting legislation.

Amendments (Textual)

F7Words in s. 8(1)(3)(4) substituted (27.7.1993: the substituting section applying in relation to chargeble transfers made on or after 6.4.1994) by 1993 c. 34, s. 197(1)(2).

F8Finance Act 1986 Sch. 19, para. 3(1),with effect from 18March 1986.Originally

“new Tables for the Tables”.

F9Finance Act 1986 Sch. 19, para. 3(2),with effect from 18March 1986.repealed by 1988, s. 136(3)and Sch.14, Part Xwith effect from 15March 1988.

F10Finance Act 1986 Sch. 19, para. 3(3),with effect from 18March 1986.Originally

“Tables”.

F11Words in s. 8(3) substituted (1.4.1996) by S.I. 1996/273, art. 5(1), Sch. 2 para. 21(a)

F12Words in s. 8(3) substituted (1.4.1996) by S.I. 1996/273, art. 5(1), Sch. 2 para. 21(b)

F13Finance Act 1986 Sch. 19, para. 3(4),with effect from 18March 1986.Originally

“Tables”.

Modifications etc. (not altering text)

C1S. 8(1) restricted (7.4.2005) by Finance Act 2005 (c. 7), s. 98(6)

C2S. 8(1) excluded (19.7.2006) by Finance Act 2006 (c. 25), s. 155(5)

C3S. 8 restricted (19.3.1997 with effect as mentioned in s. 93(2) of the amending Act) by 1997 c. 16, s. 93(2)

C4S. 8(1) excluded (16.7.1992) by Finance (No. 2) Act 1992 (c. 48), s. 72(2).

S. 8(1) excluded (27.7.1993) by 1993 c. 34, s. 196.

S. 8(1) excluded (3.5.1994 with effect as mentioned in s. 246 of the amending Act) by 1994 c. 9, s. 246

C5S. 8(1) restricted (24.7.2002) by 2002 c. 23, s. 118(2)

9 Transitional provisions on reduction of tax.E+W+S+N.I.

The transitional provisions in Schedule 2 to this Act shall have effect in relation to any enactment by virtue of which tax is reduced by the substitution of [F14a new Table] in Schedule 1.

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Annotations are used to give authority for changes and other effects on the legislation you are viewing and to convey editorial information. They appear at the foot of the relevant provision or under the associated heading. Annotations are categorised by annotation type, such as F-notes for textual amendments and I-notes for commencement information (a full list can be found in the Editorial Practice Guide). Each annotation is identified by a sequential reference number. For F-notes, M-notes and X-notes, the number also appears in bold superscript at the relevant location in the text. All annotations contain links to the affecting legislation.

Amendments (Textual)

F14Finance Act 1986 Sch. 19, para. 4with effect from 18March 1986.Originally

“new Tables”.

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