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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
Q

how much can a party of the memeber amek

A

2,500

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26
Q

how much can any oteh rperson make to amariiage gift

A

1,000

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27
Q

can a gift be given to a trust

A

yes a bare trust

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28
Q

what happens if they die within 7 years

A

charge at teh relevant taper relief

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29
Q

what is teh taper releif

A

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
Q

when can a pet become charagebkle

A

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
Q

what is quick succesion relief

A

available when property in the
deceased’s estate had passed to them by a chargeable
transfer in the five years before the death.

32
Q

what is the rate if the year of trasnfer and detah

A

100% - not more than one year

33
Q

what happens if the couple die similtaneouksy

A

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
Q

what is the transfer of nrb

A

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
Q

what is a relief

A

value of a transfer in certain
circumstances

36
Q

busines releif is

A

s for transfers of business property, and is
available for lifetime transfers and on death.

37
Q

what are the non quialifyig asstes for business releif regarding iht

A

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
Q

who is business rleeif 100% for

A

interests in unincorporated
businesses (i.e. for sole
traders and partnerships)

shareholdings of any aize unquoted and IM companies

39
Q

what is business relif is 50%

A

controlling shareholdings in
fully listed companies;

land bulidngs plants

40
Q

how muych iht would one pay if there were a sold trader and left 1 million to her son

A

there is no iht - means that busienssses can be prserved

41
Q

what is agricultural relief

A

relief for transfers of agricultural
property situated in the UK

42
Q

what is the relief for owner occupied farms

A

100%

43
Q

what is the rate for intrest of lanlored in let farmladn

A

50%

44
Q

what is the woodlands relief

A

the growth of timber

45
Q

what is a gift with reservation

A

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
Q

is a transfer of value to a abare trust a PET

A

yes

47
Q
A
48
Q

what if its a trust for a disable beneeficary

A

The creation of a trust for a disabled or vulnerable person is a
PET, even if it is a discretionary trust

49
Q

how much doe sthe settlor pay fior iht

A

25%

50
Q

how much doe sthe trust pay regarding iht

A

20%

51
Q

what is teh cumulation process

A

going back 7 years - assesed in a chrological order

52
Q

what happens when you transfer to a trust

A

the value is lost to the estate

53
Q

what is the lost to the estate principle

A

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
Q

whta is a pet

A

potentially exmpt transger

55
Q

what is a exempt trasnfer

A

exempt - not considered for IHT

56
Q

what about a chargable life time transfer

A

can become exmept after 7 years

57
Q

what ar eteh exmwpt trasnfers

A

political aprties - gifts on ,arriage - 250 - uni,tied individuals

58
Q

how many years can you go back for the gifting of 3,000

A

one year - and if you dont use all of the gift - you can carry it forward

59
Q

can teh 3,000 be part of a bigger gift

A

yes

60
Q

how much can you gift a spouse

A

unlimited as long as they are uk resident and domicile

61
Q

father makes a gift of 10,000 hasnt made

A
62
Q

what are the only chargable lifetime transfers

A

transfer into a discretionary and interest in possesion trust

63
Q

if the clt is above the nrb is it chargabel

A

yes - and the clt will be at 20%

64
Q

how much will the settlor pay regarding iht in a trust

A

25%

65
Q

how much will the trust pay regardig iht

A

20%

66
Q

CLT already have what subtracxted

A

the exemptions

67
Q

What is taper relief?

A

. A tax on gifts made during a person’s lifetime

68
Q

Which of the following is NOT a type of lifetime transfer?

A

Taxable transfer

69
Q

when is the NRB applicable

A

on death

70
Q

if one is non uk domiciled do they get the rnrb

A

no - but they get their 325,000 if they are a spouse

R03 - Chapter 1 (13 decks)

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