Inheritance Tax Act 1984 section 8

Indexation of rate bands

Section 8 provides for the automatic annual adjustment of inheritance tax rate bands in line with increases in the retail prices index (RPI), unless Parliament decides otherwise.

• If the RPI for September is higher than the previous September, the inheritance tax rate bands in Schedule 1 are automatically updated for chargeable transfers made on or after 6 April of the following year, unless Parliament decides otherwise.
• The new rate bands are calculated by increasing the existing amounts by the same percentage as the RPI increase, with results rounded up to the nearest £1,000.
• The retail prices index used is the general index of retail prices (all items) published by the Statistics Board, or any substituted index if the main one is unavailable for a given September.
• The Treasury must make a statutory instrument before each 6 April specifying the updated amounts that will apply to chargeable transfers on or after that date.