Inheritance Tax Act 1984 section 128

Rate of charge

Section 128 sets out how the rate of inheritance tax is determined when a charge arises on the disposal of trees or underwood from woodlands that previously benefited from the woodlands relief on death.

• Tax on the disposal of trees or underwood is charged at the death rate that applied when the original woodland owner died, not at rates current at the time of disposal.
• The disposal proceeds (and any earlier amounts already charged under the woodlands provisions in relation to the same death) are treated as if they had been included in the value of the estate on death.
• The disposal amount is treated as forming the top slice of the estate value, meaning it is taxed at the highest marginal rate that would have applied.
• The effect of Schedule 1A to the Act (which deals with the transferable nil-rate band between spouses and civil partners) is ignored when calculating the applicable rate.