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- The Nil-Rate Band is a term defined and used within the tax legislation of the United Kingdom (the Inheritance Tax Act 1984 ('IHTA 1984')) and which establishes the threshold below which some or all of the value of a gift, a death estate or assets held within a trust is subject to a zero rate of Inheritance Tax in the United Kingdom on an occasion of charge to Inheritance Tax. An occasion of charge to Inheritance Tax may not only be the death of an individual, but may also the date of a gift or of another act causing (or deemed to cause) a transfer of value to occur from one person to another person, trust or entity. The concept of the Nil Rate Band was not created by IHTA 1984, having been present in the preceding succession tax legislation that created Estate Duty and Inheritance Tax's immediate predecessor, Capital Transfer Tax. The amount of the Nil Rate Band has tended to increase over time to so as to keep pace with inflation and with such changes or periods of no change having the effect of reducing or increasing the number of death estates and transfers of value that are subject to the payment of the tax at a rate above 0%. Changes in the amount of the Nil Rate Band are not retrospective, in the sense that they apply to raise the threshold of the Nil Rate Band for transfers occurring on a date after the change occurs. Broadly speaking, Chargeable Lifetime Transfers, deemed transfers (such as that arising at the tenth anniversary of a trust containing Relevant Property as defined by the IHTA 1986), that exceed the Nil Rate Band and chargeable transfers on death that exceed the Nil Rate Band may be liable to IHT at a rate of 20% (for Chargeable Lifetime Transfers) or 40% (for transfers occurring on death). A lower rate of Inheritance Tax (36%) may be charged when the transfers on death are made in part to qualifying charitable beneficiaries and an effective rate of 6% (or a proportion of that amount determined in part by how long the assets have been held in trust) may apply when assets leave a trust or are held in trust after the tenth anniversary of the creation of the trust. It is important to recognise that the Nil Rate Band is treated in the legislation not as an exemption from liability from Inheritance Tax, but instead has the effect of making certain transfers of value liable to tax at a rate of 0%. (en)
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- The Nil-Rate Band is a term defined and used within the tax legislation of the United Kingdom (the Inheritance Tax Act 1984 ('IHTA 1984')) and which establishes the threshold below which some or all of the value of a gift, a death estate or assets held within a trust is subject to a zero rate of Inheritance Tax in the United Kingdom on an occasion of charge to Inheritance Tax. An occasion of charge to Inheritance Tax may not only be the death of an individual, but may also the date of a gift or of another act causing (or deemed to cause) a transfer of value to occur from one person to another person, trust or entity. (en)
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