Capital Tax

Question 1

What is inheritance tax?

Answer 1

A tax on the estate (property, possessions, money) of somebody who has died.

Question 2

What is the rate of tax?

Answer 2

40% on anything above a certain threshold.

Question 3

What % of estates pay IHT?

Answer 3

Roughly 4%

Question 4

What is the IHT legislation? Why section describes market value?

Answer 4

The IHTA 1984. Section 160.

Question 5

IHT threshold?

Answer 5

£325,000. Can be passed onto Spouse/Civil Partner to add up to £650,000.

Question 6

How much does IHT raise?

Answer 6

£7 billion a year

Question 7

Why is it a political hot potato?

Answer 7

One side: taxing earned income again. Other side: equality

Question 8

Name some exemptions and reliefs?

Answer 8

Reliefs: loss on sale relief, business property relief.
Exemptions: First £325,000. Gifts 7 year rule. Charitable relief

Question 9

What is CGT?

Answer 9

A tax on the profit from a disposal of an asset such shares or a house.

Question 10

Do you pay CGT on selling your car of wining the lottery?

Answer 10

No

Question 11

Name a tax relief for CGT?

Answer 11

Private Residence Relief

Question 12

What law relates to undivided shares?

Answer 12

The Trusts of Land and Appointment of Trustees Act 1996 and the Law of Property Act 1925

Question 13

What is the difference between a joint tenancy and a tenancy in common?

Question 14

A 15% discount for an undivided share?

Answer 14

The Nellie Wight case. Applicable when co owner still in occupation as main residence and/or the purpose of the trust still exists.

Question 15

A 10% discount for an undivided share?

Answer 15

James Anson v HMRC. IHT case of a shop in Devon. Where the co owner not in occupation and the purpose behind the trust no longer exists.