Finance Act 2008

Amendments of IHTA 1984

4 (1) Section 151BA (rates of charge under section 151B) is amended as follows.

(2) In subsection (5), for “had been in force at the time of the member’s death” substitute “(“the applicable Table”) had been in force at the time of the member’s death, but subject to subsections (6) and (9) below.”

(3) After that subsection insert—

“(6) The nil-rate band maximum in the applicable Table is to be treated for the purposes of this section as reduced by the used-up percentage of the difference between—

(a) that nil-rate band maximum, and

(b) the nil-rate band maximum which was actually in force at the time of the member’s death.

(7) For the purposes of subsection (6) above “the used-up percentage” is—

100 - ENRBM × 100

where—

• E is the amount by which M is greater than VT under section 8A(2) above in the case of the member; and

• NRBM is the nil-rate band maximum at the time of the member’s death.”

(4) After subsection (7) insert—

“(8) The following provisions apply where—

(a) tax is charged under section 151B above, and

(b) immediately before the member’s death, the member had a spouse or civil partner (“the survivor”).

(9) If the survivor died before the event giving rise to the charge, tax is charged as if the personal nil-rate band maximum of the member were appropriately reduced.

(10) In subsection (9) above—

• “the personal nil-rate band maximum of the member” is the nil rate band maximum in the applicable Table, increased in accordance with section 8A above where that section effected an increase in that nil-rate band maximum in the case of the member (as a survivor of another deceased person), and

• “appropriately reduced” means reduced by the amount (if any) by which the amount on which tax was charged at the rate of nil per cent. on the death of the survivor was increased by reason of the operation of section 8A above by virtue of the position of the member.

(11) If the survivor did not die before the event giving rise to the charge, tax is to be charged on the death of the survivor as if the percentage referred to in section 8A(3) above in the case of the member were that specified in subsection (12) below.

(12) That percentage is—

where—

• AE is the adjusted excess, that is the amount by which M would be greater than VT under section 8A(2) above in the case of the member if—

  (a)

  the taxable amount were included in the value transferred by the chargeable transfer made on the member’s death, and

  (b)

  the nil-rate band maximum at the time of the member’s death were ANRBM; and

• ANRBM is the adjusted nil-rate band maximum, that is the nil-rate band maximum in the applicable Table (as reduced under subsection (6) above where that subsection applies).”