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R03 - Chapter 1 > Chapter 4 > Flashcards

Chapter 4 Flashcards

1
Q

when is IHT chatrged

A

tarsnfer of property on death

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2
Q

who is described as the transferer or the doniee

A

whom the property is transfered to

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3
Q

what is teh tax rates

A

teh nrb is 325,000

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4
Q

what is the rate where chargarable trasnferes are made into most trsust

A

20% over th eNRb

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5
Q

what is teh rate if one donates 10% of their estate into charity

A

36%

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6
Q

what happens to unusded nrb

A

transferred to the estate of a surviving spouse or civil partner.
In esse

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7
Q

what is teh resident nrb

A

The residence nil rate band (RNRB) is in addition to the
normal £325,000 nil rate band. It is intended to protect, at
least partially, the family home from IHT, and is £175,000 in
2024/25.

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8
Q

who can inherit the 175,000 RNRB

A

s only available where a home is inherited
on death by direct descendants, who may be the child

spouse or civil partner of one of these lineal
descendants

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9
Q

what is teh cumulation principle

A

o transfers during life and
on death

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10
Q

what is a PET

A

a potentially exempt transfer (PET) made within seven
years of the original transfer becomes chargeable on the
transferor’s death

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11
Q

what is a chargable life time trasnfer

A

o pay on a chargeable
lifetime transfer (CLT) made within seven years of the
transferor’s death.

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12
Q

who is liable to iht

A

Individuals domiciled in the UK are liable to IHT on all their
property, whether it is in the UK or elsewhere.

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13
Q

what if one is domiciled outside the uk

A

IHT only applies to
property that is situated in the UK.

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14
Q

what is teh criteria for iht

A

they are born in the UK with a UK domicile of origin and
return to the - at ealst one of the previous two tax year

– they are resident (determined according to the usual
income tax rules) in the UK for at least 15 out of the
previous 20 tax years

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15
Q

what is gratoius intent

A

IHT is charged on dispositions that are gifts or part gifts.
There can be no IHT on commercial transactions if full
consideration is received because there is then no loss to
the estate.

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16
Q

what is teh failiure to exercise a right

A

a deliberate omission to exercise a
right reduces the value of the estate.

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17
Q

what is a lifetime tarnsfer

A

A lifetime transfer that is neither exempt nor potentially
exempt is chargeable. If this takes the seven-year cumulation
total over the nil rate band, the excess is taxable at the
lifetime rate of 20%

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18
Q

what is exemption of iht

A

e transfer does not count as
a chargeable transfer a

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19
Q

what is a relief

A

reduces the value of a chargeable transfer

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20
Q

what is teh annual exemption

A

3,000 - one tax year

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21
Q

what is teh small gifts trasnfer

A

up to 250 - many people as liek - outight not into trsurt

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22
Q

are tarsnfers to spouses exmept

A

yes - even if they are nit loviing togetehr - nio iht if there is a breakdiwn - f the transferor is domiciled in the UK but the spouse or
civil partner is not, the exemption is limited to a lifetime
total value of £325,000

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23
Q

how much can one parent gift for wedding

A

5,000

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24
Q

how much can a gradnparent gift

A

2,500

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25
how much can a party of the memeber amek
2,500
26
how much can any oteh rperson make to amariiage gift
1,000
27
can a gift be given to a trust
yes a bare trust
28
what happens if they die within 7 years
charge at teh relevant taper relief
29
what is teh taper releif
If the donor survives for at least three years after the gift, a reduced percentage of the full death rate is used to calculate the tax
30
when can a pet become charagebkle
to increase the potential tax liability on the estate. This is because the PET uses up all or part of the nil rate band.
31
what is quick succesion relief
available when property in the deceased’s estate had passed to them by a chargeable transfer in the five years before the death.
32
what is the rate if the year of trasnfer and detah
100% - not more than one year
33
what happens if the couple die similtaneouksy
older has died first - Thus, if the older person left the property to the younger one, two successive tax charges could occur for that property
34
what is the transfer of nrb
Any unused nil rate band on a person’s death can be transferred to the estate of their surviving spouse or registered civil partne
35
what is a relief
value of a transfer in certain circumstances
36
busines releif is
s for transfers of business property, and is available for lifetime transfers and on death.
37
what are the non quialifyig asstes for business releif regarding iht
dealing in securities, stocks or shares, land or buildings, or making or holding investments property is subject to a binding contract for sale at the time of the transfer.
38
who is business rleeif 100% for
interests in unincorporated businesses (i.e. for sole traders and partnerships) shareholdings of any aize unquoted and IM companies
39
what is business relif is 50%
controlling shareholdings in fully listed companies; land bulidngs plants
40
how muych iht would one pay if there were a sold trader and left 1 million to her son
there is no iht - means that busienssses can be prserved
41
what is agricultural relief
relief for transfers of agricultural property situated in the UK
42
what is the relief for owner occupied farms
100%
43
what is the rate for intrest of lanlored in let farmladn
50%
44
what is the woodlands relief
the growth of timber
45
what is a gift with reservation
A gift is treated as a gift with a reservation of benefit if it is not enjoyed to the exclusion or virtual exclusion of the donor.
46
is a transfer of value to a abare trust a PET
yes
47
48
what if its a trust for a disable beneeficary
The creation of a trust for a disabled or vulnerable person is a PET, even if it is a discretionary trust
49
how much doe sthe settlor pay fior iht
25%
50
how much doe sthe trust pay regarding iht
20%
51
what is teh cumulation process
going back 7 years - assesed in a chrological order
52
what happens when you transfer to a trust
the value is lost to the estate
53
what is the lost to the estate principle
well - if i have two vases worth 20,000 however one by itself is 5,000 and i gift one vase away, the lost to the estate is 15,000
54
whta is a pet
potentially exmpt transger
55
what is a exempt trasnfer
exempt - not considered for IHT
56
what about a chargable life time transfer
can become exmept after 7 years
57
what ar eteh exmwpt trasnfers
political aprties - gifts on ,arriage - 250 - uni,tied individuals
58
how many years can you go back for the gifting of 3,000
one year - and if you dont use all of the gift - you can carry it forward
59
can teh 3,000 be part of a bigger gift
yes
60
how much can you gift a spouse
unlimited as long as they are uk resident and domicile
61
father makes a gift of 10,000 hasnt made
62
what are the only chargable lifetime transfers
transfer into a discretionary and interest in possesion trust
63
if the clt is above the nrb is it chargabel
yes - and the clt will be at 20%
64
how much will the settlor pay regarding iht in a trust
25%
65
how much will the trust pay regardig iht
20%
66
CLT already have what subtracxted
the exemptions
67
What is taper relief?
. A tax on gifts made during a person's lifetime
68
Which of the following is NOT a type of lifetime transfer?
Taxable transfer
69
when is the NRB applicable
on death
70
if one is non uk domiciled do they get the rnrb
no - but they get their 325,000 if they are a spouse

R03 - Chapter 1 (13 decks)

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