Chapter 31 - Inheritance tax

Question 1

What is the main situation where IHT can happen?

Answer 1

when a transfer of value of chargeable property is made by a chargeable person

Question 2

What is a disposition?

Answer 2

a disposal of property or an interest in property This included disposals made during the lifetime of the disposer

Question 3

What dispositions are not regarded as transfer for value of iHT purposes? 4

Answer 3

1 dispositions without gratuitous intent

2. dispositions made during the transferor’s lifetime which are allowable expenditure for income tax or corporation tax purposes which consist of pension contributions made by an employer for the benefit of employees
3. dispositions made during the transferors lifetime for the maintenance of his or her family
4. dispositions caused by the fact that the transferor has died whilst on active service.

Question 4

Exclusions from IHT’s definition of property 5

Answer 4

1. property situated outside of the UK and owned by a person who is domiciled outside the UK
2. government securities outside the uK and owned by a person who is domiciled outside the UK
3. “heritage property” designated as such by the treasury so long as undertakings are given with regard to maintenance of the property and the provision of public access
4. certain decorations and other awards
5. a reversionary interest in a trust or settlement unless acquired by purchase

Question 5

Gifts in consideration of marriage

Answer 5

1. £5,000 if made by a parent of the bride or groom
2. £2,500 if made by grandparent or remoter ancestor of bride or groom
3. £2500 made from bride to groom
4. £1000 in any other case

Question 6

Lifetime transfers annual exception

Answer 6

£3000 if exceeds this this amount is set against transfers in chronological order.
Any unused part may be carried forward one year but no further

Question 7

What is a gift with reservation? 2

Answer 7

1. possession and enjoyment of the property is not bona fide assumed by the recipient of the gift at or before the start of the relevant period, or
2. the property is not enjoyed to the entire exclusion of the donor throughout the whole of the relevant period.