2.5 Taxation - Inheritance Tax

Question 1

What is IHT applied towards?

Answer 1

Deceased’s estate

- Before death

Question 2

When may 100% be reduced from deceased’s estate?

Answer 2

1) Deceased after 6 April 1996

2) Either
- Transfer of business/business interest
- Co’s shares > UNquoted

Question 3

When may 50% be reduced from deceased’s estate?

Answer 3

Co’s quoted shares + securities
- Where transferor controlled immediately before transfer

Land/Buildings/Plant and machinery
- Owned by Transferor
- Used immediately before transfer
> Mainly for business (Transferor is partner)
> For Co’s business (Transferor controlled Co)
> Held in trust (Transferor has right to benefit from trust + use assets in trust in their business)

Question 4

When is relief not applicable?

Answer 4

Co

• Securities
• Stocks
• Land/Building
• Making/Holding investments

Not-for-profit Co

Co > Sale
- UNLESS Co carries on business + Transferor paid in shares

Co > WU
- UNLESS allowed to carry on

Co’s asset > Agricultural relief

• NOT for future use
• NOT for Co in 2 years immediately before Transferor passed on as gift during lifetime/part of will
• UNLESS non-qualifying asset is used in business