24. Inheritance tax

Question 1

How do you work out the transfer of value?

When might this be different to the value of the asset received to the donee?

Answer 1

Value of estate before gift
(Value of estate after gift)
= Transfer of value

Most likely to be different in unquoted shares where controlling shareholdings have higher % value to lower shareholdings.

Question 2

How does lifetime tax vary on who pays it?

Answer 2

Donor pays: 25%. Gift value is thus net as tax already paid.

Donee: 20%, gift value gross as still need to pay tax.

Question 3

When calculating death tax, the NRB is affected by what?

Answer 3

all CLTS and chargeable PETs from previous 7 years

Question 4

Are endowment mortgages deductible from the death estate?

Answer 4

No

Question 5

When is lifetime tax due?

Answer 5

Dependent on date of gift:

• Before 30th Sep: Following 30th Apr
• After 01st Oct: 6 months after the end of the month of gift

Question 6

When is death tax due and who is it paid by?

Answer 6

Due on the earlier of:

• 6 months after month end of death
• delivery of an account of estates to HMRC

Death tax paid by executors