IHTM30353 - 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: