2005 No. 718

INHERITANCE TAX

The Inheritance Tax (Indexation) Order 2005

Made

The Treasury, in pursuance of section 8(4) of the Inheritance Tax Act 19841 make the following Order:

1

This Order may be cited as the Inheritance Tax (Indexation) Order 2005.

2

The amounts which, unless Parliament otherwise determines, will be treated by virtue of section 8 of the Inheritance Tax Act 1984 as specified in the Table in Schedule 1 to that Act2 in relation to chargeable transfers on or after 6th April 2005 are as follows—

TABLE OF RATES OF TAX

Portion of value

Rate of Tax

Lower Limit

Upper Limit

Per cent.

£

£

0

272,000

NIL

272,000

–

40

Jim MurphyNick AingerTwo of the Lords Commissioners of Her Majesty’s Treasury

(This note is not part of the Order)

This Order, made under section 8 of the Inheritance Tax Act 1984 (formerly the Capital Transfer Tax Act 1984) (“section 8”), substitutes a new Table of rate bands and rates in Schedule 1 to that Act for the Table which was substituted by the Inheritance Tax (Indexation) Order 2004 (S.I.2004/771) in relation to chargeable transfers made in the year beginning 6th April 2004.

The figures in the first and second columns of the new Table are the amounts specified in the Table in Schedule 1 to the Inheritance Tax Act 1984 (as so substituted) increased by the amount of the percentage increase in the retail prices index for September 2004 over that for September 2003, and rounded up to the nearest £1,000 in accordance with subsections (2) and (3) of section 8 (as amended by paragraph 3 of Schedule 19 to the Finance Act 1986 and section 197 of the Finance Act 1993). The “retail prices index” is defined in subsection (3) of section 8, as amended by paragraph 21 of Schedule 2 to the Transfer of Functions (Registration and Statistics) Order 1996 (S.I.1996/273), as “the general index of retail prices (for all items) published by the Office for National Statistics”. The retail prices index for September 2003 is 182.5 and for September 2004 is 188.1 (based on January 1987 as 100) (see Table 3.1 on page 84 of the November 2004 issue (No. 612) of Economic Trends, a National Statistics publication).

The new Table will apply in relation to chargeable transfers on or after 6th April 2005 unless Parliament otherwise determines.