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HMRC internal manual

Inheritance Tax Manual

Rates of interest: the higher and lower rates before 16 December 1986

In the period prior to 16 December 1986 there were two rates of interest:

  • the lower interest rate (the death rate), was appropriate for:


  • transfers on death
  • potentially exempt transfers (failed PETs (IHTM04057))
  • tax charged under the gifts with reservation (IHTM04071) provisions (treated either as part of the transfer on death or as potentially exempt transfers (failed PETs))
  • the Additional Charges (IHTM14571) on an immediately chargeable transfer when the transferor dies within seven years of the transfer
  • any tax for which, by virtue of IHTA84/S206, only a political party was liable
  • any additional tax payable when the settlor dies after an occasion of charge under Chapter III Part III
  • tax repayable under IHTA84/S147 (2)


  • the higher rate was charged in any other case.  The higher rate was also expressly applied by IHTA84/S236 (3) to tax repayable on a claim under IHTA84/S146 (2) (which concerns Orders under IHTA84/S10 Inheritance (PFD) Act 1975) and IHTA84/S150 (voidable transfers (IHTM14890)).  The higher rate was also expressly applied, by IHTA84/S236 (4), to tax charged by virtue of IHTA84/S147 (4) (legitim (IHTM35211)).

The statutory rates were as follows:


### Dates ### Death rate ### Higher rate
1 Oct 1975 to 31 Dec 1979 6% 9%
1 Jan 1980 to 30 Nov 1982 9% 12%
1 Dec 1982 to 30 Apr 1985 6% 8%
1 May 1985 to 15 Dec 1986 9% 11%