Assumed IHT Knowledge

Question 1

what exemptions apply to lifetime gifts?

Answer 1

• gift to individual of £250 or less per receiptant per tax year
• marriage exemption- 5k by parent, 2.5k by grandparent, 2.5k by party, 1k by anyone else.
• school feels, regular payments, does not impact donors cost of living

Question 2

when is death IHT on lifetime gift due and death tax on the death estate due?

Answer 2

• 6 months after the end of the month of death.
• earlier of 6 months after the end of month of death and delivery of an account of the estate assets to HMRC.

Question 3

what are the new exemptions at ATX?

Answer 3

• gifts to political party- last elec 2 memebrs were elected to house of commons or got at least 150k votes
• gifts to charirty
• transfers between spouse (limit of 325k of spouse not uk domiciled)

Question 4

what is the reduced tax rate for charitable legacies?

Answer 4

if at least 10% of an individual’s baseline amount is left to a charity in their will, then the whole of the
death estate will be charged to tax at 36%.

Question 5

what is deemed domicile for iHT purposes?

Answer 5

1. we could have someone who has been UK domiciled but then leaves the UK and makes a permanent
   home abroad. In these circumstances that person can be deemed as domiciled for 3 further tax years.
2. if someone has been a UK resident for 15 of the previous 20 tax years with at least one of those being
   in the 3 tax years before the year of the transfer we are looking at. They would then be deemed as
   domiciled in the tax year of the transfer.
3. if someone had been born in the UK, their domicile of origin is the UK, is a UK resident in the tax year
   of the transfer we are looking at and was also resident in the UK for at least one of the two previous tax
   years then they will be treated as deemed domiciled for the tax year in question

Question 6

what are the rules for deed of variation?

Answer 6

The agreement must be:
made in writing and signed by all of the beneficiaries affected by it,
there must not be any amount paid to anyone to get them to agree,
it needs to be made within 2 years of the death,
and state whether it is intended be effective for both IHT and CGT purposes or just one tax.

Question 7

what are the rates for taper relief?

Answer 7

more than 3 but less than 4 20%
more than 4 but less than 5 40%
more than 5 but less than 6 60%
more than 6 but less than 7 80%

Question 8

when is tax on lifetime gifts due?

Answer 8

if first half of tax year apr-sep= 30 apr after end of tax year
oct- april= 6 months after end of month of gift

Question 9

what are the rules for gift with reservation?

Answer 9

• if GWR is lifted, there will be a furethe pET equal to value of property at that time
• if GWR still exist and perosn dies, value of proeprty at death will be included.
• higher tax liability applies if failed PET.

Question 10

when and how can a person elect to be treated as UK domiciled for IHT?

Answer 10

They need to have a UK domiciled spouse or partner.
lifetime election- antime during the lifetime-can take affect up to 7 years prior but not further back than 6 april 2013.
- on death- has to be made within 2years of death.

Question 11

what assets qualify for IHT intalments?

Answer 11

• land and shares
• tax due on transfer into 10 equal annual instalments starting from the normal due date for payment.