Home / Legal principles of life insurance / - Inheritance Tax
The way the tax works is that all chargeable transfers after 26 March 1974 are totted up and tax is payable once the threshold is reached.
However, once a transfer is more than seven years old it drops out of the totting-up.
When death occurs, the estate left is added to the total of non-exempt lifetime gifts in the previous seven years in order to find the tax rates applicable. In some circumstances this 'cumulation period' can be as long as 14 years. The rate of tax currently charged on death is 40%.
The following table shows the different thresholds in use for deaths between 1990 and 2010.
Tax Year Threshold
06.04.1990 to 05.04.1991 |
£128,000 |
06.04.1990 to 05.04.1991 |
£128,000 |
06.04.1991 to 05.04.1992 |
£140,000 |
10.03.1992 to 05.04.1995 |
£150,000 |
06.04.1995 to 05.04.1996 |
£154,000 |
06.04.1996 to 05.04.1997 |
£200,000 |
06.04.1997 to 05.04.1998 |
£215,000 |
06.04.1998 to 05.04.1999 |
£223,000 |
06.04.1999 to 05.04.2000 |
£231,000 |
06.04.2000 to 05.04.2001 |
£234,000 |
06.04.2001 to 05.04.2002 |
£242,000 |
06.04.2002 to 05.04.2003 |
£250,000 |
06.04.2003 to 05.04.2004 |
£255,000 |
06.04.2004 to 05.04.2005 |
£263,000 |
06.04.2005 to 05.04.2006 |
£275,000 |
06.04.2006 to 05.04.2007 |
£285,000 |
06.04.2007 to 05.04.2008 |
£300,000 |
06.04.2008 to 05.04.2009 |
£312,000 |
06.04.2009 to 05.04.2010 |
£325,000 |
Lifetime Transfers
IHT is charged on the value transferred by a chargeable transfer.
A transfer of value is any disposition made by a transfer or by which the value of his estate immediately afterwards is less than it would have been if the disposition had not been made.
The tax therefore affects only dispositions in the nature of a gift or part gift, and does not affect commercial transactions where full consideration is received, as there is then no loss to the estate. For lifetime transfers the tax rate is currently 20%.
Definitions
Per capita means by the head.
Per stirpes means by descent. It is inherited through their parent and not by their own right.
Where property divides per capita, it is divided into as many shares as there are children. Where per stirpes, the share that would have fallen to the predeceasing parent, if alive, is divided equally among his/her children.
`Child' and `children' include a child or children adopted by the deceased under the Adoption of Children Acts.
02 October 2007 12:44:13
The importance of critical illness cover has been underlined by bowel cancer experts.
The charity Cancerbackup pointed out that around 36,000 people develop the disease every year in the UK, while only half survive.
The cancer is more common in older people and has been linked to diets high in animal fat and protein and low in fibre (fruit and vegetables). People who drink a lot of alcohol may also be at a higher risk of the disease, which usually develops in the large bowel.
"People who had had ulcerative colitis or Crohn’s disease for a long time also have an increased risk of developing bowel cancer. Other factors include being overweight, taking very little exercise and smoking," commented Health Insurance magazine.
The publication added that treatment depends on the stage of the cancer and where it is in the bowel, with people in the early stages able to have the disease completely removed by surgery.
Those in the more advanced stages may need chemotherapy to reduce the risks of the cancer coming back.
Bowel cancer is the third most common cancer affecting both men and women in the UK.
Direct Life and Pensions Services Ltd are one of the UK's leading providers of life insurance, term life assurance, mortgage protection, and critical illnesslife insurance policies online.
25 July 2007 11:32:29
Air traffic controllers might encounter a lot of stress in their job, but this won't affect their life insurance premiums, according to one independent financial adviser (IFA).
Workplace stress doesn't affect life cover costs, as there's little evidence that it can directly jeopardise your life, said IFA Kieran Platt.
Stressful employment in industries such as air traffic control or investment banking would not affect a life cover premium, though.
"It would more likely effect someone going for income protection insurance," he said, "because they're more likely to be off work sick – but they're no more likely than anyone else, statistically, to die.
"[With] policies like income protection, which cover you if you're off work for a few weeks, the premium's more likely to be effected by stressful jobs.
"Teachers pay more for income protection than office workers do, because statistically teachers take more time off work sick because of stress or whatever. But for life insurance they pay the same as everyone else."
He added: "If there was [evidence that stress makes claims more likely], it would mean that premiums were higher for these people. We've not seen that [evidence]."
01 August 2008 17:27:24
A number of families in the UK received devastating news this week that charges would not be brought against hospitals after a superbug outbreak.
At least 90 patients reportedly died after more than 1,000 were infected with Clostridium difficile.
However, the police and the Health and Safety Executive claimed that the evidence was not strong enough to justify a criminal inquiry.
"Those patients didn't die by chance. They died because they contracted C.diff at the trust because of poor hygiene and care, so they are to blame, without a doubt," said Cheryl Baker, whose mother died of the bug.
Geoff martin from the campaign group Health Emergency described the case as the "worst single corporate failure in the history of the NHS".
The two serious outbreaks occurred at three sites in Tunbridge Wells, Pembury Hospital and Maidstone Hospital.
This comes after news that new guidelines on tackling C.diff are expected to be reviewed after epidemics have been linked to a new hyper-virulent strain.
Patients going into hospital could cover themselves by taking out a UK life insurance policy.
Life insurance policies may give patients going into hospital peace of mind.
