2b. Capital tax - Inheritance Tax: Death Estate

Question 1

Who are the exempt legacies
- what do you do with the amount given to them at death estate as per will

Answer 1

Spouses/ civil partner / charity / politician parity
Deduct from death estate

Question 2

Valuation of quotes shares and securities on death esatate.

1. What’s the calculation
2. If quotes ex div =
3. Of quotes ex int=

Answer 2

1. Lower of :
2. Quarter up method
   = LV + (0.25x (HV-LV) )
3. Average of highest and lowest marked bargains
   = 0.5 x (H + L )
4. If quoted ex div =add next dividend received
5. If quotes ex int= ass next interest received less 20% tax

Question 3

What’s deemed domicile in regards to IHT
- resident in UK for what of previous 20 tax year
AND at least resident in one out of the last 4 tax years
- born, domicile resident this year and Atleast 1 year resident in previous how many tax years
- remain UK domicile for how many years after change of domicile to domicile of choice

Answer 3

Deemed domicile:
- 15 R/20 PTY & R 1R in 4PTY
- D UK & at least 1R / 2TY
- if you decide to change you’re domicile you’re still uk domicile for 3 years

Question 4

Calculation of valuation of unit trust
Bid prices and number of units given

Answer 4

Lowest bid price x no. Units

Question 5

Quick succession relief
1. Applicable to deceased who received the gift and what did they pay on it
2. Within how many years before their death did they receive the gift
3. Calculation of QSR
4. What’s the appropriate percentage if the deceased person had the gift for less than 1 year
5. What’s the appropriate percentage if the deceased person had the gift for more than one year

Answer 5

1. Pay IHT on it
2. 5 years
3. ( IHT paid on 1st death / gross chargeable estate ) x appropriate %
4. 100%
5. 20% reduction every year

Question 6

When does the reduced rate of 36% apply to IHT payable on death estate

Answer 6

If total charitable legacies on death is more that 10% of baseline amount

Question 7

How do you calculate the baseline amount

Answer 7

Taxable estate
Plus charitable legacy
Plus residents bill rate band
= baseline amount

Question 8

Inheritance tax computation based on the death estate:
(1) Less: QSR / DTR
(2) IHT payable
(3) Assets / BPR/APR
(4) Less: debts due by the deceased / exempt legacies / gift with reservation
(5) IHT @ 40/36%
(6) Less: RNRB (175k)/ NRB LESS GCT within 7 years

Answer 8

(3) Assets / BPR/APR
(4) debts due by the deceased / exempt legacies / gift with reservation
= GROSS CHARGEABLE ESTATE
(6) Less: RNRB / Available NRB
= TAXABLE ESTATE
(5) IHT @ 40/36%
(1) Less : QSR / DTR
(2) IHT payable