Tax Bands

2004/05

2005/06

Lower Rate Tax Band

£2,020

£2,090

Tax in Band

£202.00

£209.00

Rate

10%

10%

Basic Rate Tax Band

£2,021-£31,400

£2,091-£32,400

Tax in Band

£6,463.60

£6,668.20

Rate

22%

22%

Higher Rate Tax Band

£31,400+

£32,400+

Tax in Band

unlimited

unlimited

Rate

40%

40%

Allowances & Reliefs

2004/05

2005/06

Personal allowance

£4,745.00

£4,895.00

Personal allowance 65-74

£6,830.00

£7,090.00

Personal allowance 75+

£6,950.00

£7,220.00

Married couple's allowance*

...if older partner aged 65-74*

£5,725.00

£5,905.00

...if older partner aged 75+*

£5,795.00

£5,975.00

.minimum amount

£2,210

£2,280

Age allowance withdrawn
(to personal allowance levels) by £1 for every £2 of income over

£18,900.00

£19,500.00

Bands

2004/05

2005/06

Nil Rate Band

£263,000

£275,000

Rate on excess on death

40%

40%

Exemptions & Gifts

2004/05

2005/06

Annual exemption per donor

£3,000

£3,000

Small gifts to any person

£250

£250

Wedding gifts by parents

£5,000

£5,000

Wedding gifts by grandparents

£2,500

£2,500

Wedding gifts by any other person

£1,000

£1,000

If you die after three years but within seven years of making a gift and the gift becomes liable to tax, taper relief means the recipient will not pay the full rate of IHT on the gift. 

The table below shows the rates of tax payable.

Years between              % of death rate

 gift & death                   tax payable

0-3                                      100

3-4                                        80

4-5                                        60

5-6                                        40

6-7                                        20