Lifetime transfers: specific lifetime reliefs: taper relief: quantifying the relief
The amount of the taper relief depends on the length of time by which the deceased survived the transfer. Allow a reduction of the charge to tax on the transfer by charging the following percentages of the full rate (years in the table below mean calendar years, not tax years).
|Years between transfer and death||Percentage of full tax rate|
|3 to 4||80|
|4 to 5||60|
|5 to 6||40|
|6 to 7||20|
Julia makes a gift of £375,000 on 1 February 2009. She dies on 20 June 2012.
£50,000 of the gift exceeds the £325,000 nil rate band.
Full rate of tax on the gift: 40% × £50,000 = £20,000
The gift is within 3 to 4 years of the death, so taper relief allows you to charge tax at 80% of the full rate.
Revised tax charge: £20,000 × 80% = £16,000. (The relief is £4,000).