4 - Inheritance Tax (C)

Question 1

What are the 3 main reliefs available for IHT?

Answer 1

Business relief, agricultural relief and woodlands relief

Question 2

How long does business property need to be owned for before business relief becomes available?

Answer 2

2 years

Question 3

100% business relief is available for which type of businesses?

Answer 3

Unincorporated (such as partnerships and sole traders) and unquoted and AIM companies

Question 4

What IHT business relief is available for EIS, SEIS and VCTs?

Answer 4

100% usually for EIS and SEIS after holding for 2 years, but nothing on VCT

Question 5

If a sole trader dies and leaves the whole business to her son, what is the IHT position?

Answer 5

Not liable, but not exempt. Instead 100% business relief is used.

Question 6

50% business relief is available for which type of businesses?

Answer 6

Controlling shareholdings in listed companies
Land, buildings, plant and machinery used mainly in connected with the company controlled by the donor”

Question 7

Which type of property is included and excluded for agricultural relief?

Answer 7

Land, crops and farm buildings. Not animals or equipment.
Turn the farm upside and anything that falls off the surface does not qualify!

Question 8

If agricultural relief is not based on the developmental value of the land, what is it based on instead?

Answer 8

Agricultural value

Question 9

Agricultural relief is available at 50% and 100%. When do each apply?

Answer 9

100% owner-occupied farms and farm tenancies
50% interests of landlords in let farmland”

Question 10

When is the 50% agricultural relief increased to 100% for land let tenancies?

Answer 10

Tenancies exceeding 12 months that started after 31 August 1995.

Question 11

Agricultural relief does not apply to property that is subject to a binding contract for sale. True or false?

Answer 11

TRUE

Question 12

When agricultural relief and business relief are both available, which is given first?

Answer 12

Agricultural

Question 13

What must be grown for woodland relief to be available?

Answer 13

Timber

Question 14

Woodlands relief applies to both the land and the timber grown on it. True or false?

Answer 14

False, just the timber. But the land could qualify for agricultural relief instead.

Question 15

What is the main purpose of the available business, woodlands and agricultural relief?

Answer 15

To avoid the family business and/or partnership being split up/sold to pay IHT

Question 16

What the business relief rates on the following:
1. Whole or part of an unincorporated business
2. Shares in an unquoted trading company
3. A controlling share holding in a quoted company
4. Property used in a trade by a company controlled by the donor or partnership in which the donor is a partner

Answer 16

1. Whole or part of an unincorporated business = 100%
2. Shares in an unquoted trading company = 100%
3. A controlling share holding in a quoted company = 50%
4. Property used in a trade by a company controlled by the donor or partnership in which the donor is a partner = 50%

Question 17

What are the 2 rates of business relief available?

Answer 17

100% and 50%

Question 18

What is the 2 and 7 year rule surrounding the transfer of agricultural property for agricultural relief purposes?

Answer 18

You have to have occupied the property for agricultural purposes for at least 2 years before transferring it, or owened if for 7 years with others farming on it

Question 19

If woodland relief only covers the timber grown on the land, what other relief could be available for the land its grown on?

Answer 19

Agricultural

Question 20

Which relief allows IHT to be deferred until timber has been sold on woodland?

Answer 20

Agricultural

Question 21

When is quick succession relief available?

Answer 21

When the property in the deceased’s estate had passed to them by a chargeable transfer in the five years before the death, and therefore charged twice for IHT

Question 22

Can shares qualify for business relief?

Answer 22

Yes