Chapter 4) Inheritance tax death estate Flashcards
1
Q
What is inheritance tax (‘IHT’)?
A
A tax paid on the estate of a deceased person, applicable to UK assets of UK resident taxpayers and worldwide assets of UK-domiciled taxpayers.
2
Q
What events during a person’s lifetime can trigger an IHT charge?
A
Lifetime transfers and death.
3
Q
What are the current rates of IHT?
A
- Nil rate band: 0%
- Lifetime rate: 20%
- Death rate: 40%
4
Q
What is a Potentially Exempt Transfer (‘PET’)?
A
A lifetime transfer of value that may become chargeable to IHT if the transferor does not survive for seven years.
5
Q
What is a Lifetime Chargeable Transfer (‘LCT’)?
A
A lifetime transfer of value that is immediately chargeable to IHT at the lifetime rate.
6
Q
What happens to a PET if the transferor dies within seven years?
A
The PET ‘fails’ and becomes a chargeable transfer, subject to IHT.
7
Q
What is the basic nil rate band (NRB) amount?
A
£325,000
8
Q
What is the additional nil rate band for individuals who leave their family home to direct descendants?
A
Currently £175,000, known as the ‘residence nil rate band’ (RNRB).
9
Q
What is the tax treatment of an LCT?
A
- Chargeable when made
- IHT payable at 20%
- Reassessed to 40% if transferor dies within 7 years.
10
Q
What is the deemed transfer of assets upon death?
A
All assets owned by the individual at the date of death are deemed transferred.
11
Q
How is the value of the death estate calculated for IHT?
A
By reference to the market value of items in the estate on the date of death.
12
Q
What is cumulation in the context of IHT?
A
A method to prevent individuals from reducing their IHT liability by making multiple separate dispositions.
13
Q
What is the cumulative total in IHT calculations?
A
The total chargeable value of all chargeable transfers made in the previous 7 years.
14
Q
What are some examples of exemptions and reliefs in IHT?
A
- Gifts to certain individuals or entities are exempt
- Gifts of specific assets may benefit from reliefs.
15
Q
What is the process to calculate IHT on a failed PET or LCT?
A
- Identify value transferred
- Apply exemptions & reliefs
- Identify chargeable value
- Calculate and apply NRB
- Apply rates of tax.
16
Q
What is the step-by-step process to calculate IHT on a death estate?
A
- Calculate cumulative total
- Identify assets included in the taxable estate
- Value the taxable estate
- Deduct debts/expenses
- Apply exemptions & reliefs
- Apply RNRB
- Apply basic NRB and calculate tax.
17
Q
What does ‘HMRC’ stand for?
A
His Majesty’s Revenue & Customs, the UK tax authority.
18
Q
True or False: The death rate for IHT is 20%.
A
False.
19
Q
Fill in the blank: An LCT is taxed at the lifetime rate of _____%.
A
20
20
Q
What is a chargeable transfer?
A
A transfer of value made by an individual that is not an exempt transfer.
21
Q
What is the significance of the ‘transferable nil rate band’ (TNRB)?
A
Unused proportion of an individual’s basic NRB can be inherited by their surviving spouse or civil partner.
22
Q
What happens to a death estate that includes PETs or LCTs made in the 7 years before death?
A
They must be reassessed to IHT.
23
Q
What is the basic nil rate band (NRB) for IHT purposes?
A
The basic nil rate band is £325,000.
24
Q
What is the transfer of the unused portion of the basic NRB called?
A
Transferable nil rate band (TNRB).
25
What is the additional nil rate band for individuals leaving their family home to direct descendants?
Residence nil rate band (RNRB) of £175,000.
26
What does cumulation refer to in the context of IHT?
Cumulation prevents individuals from reducing or avoiding IHT liability by considering chargeable transfers made in the 7 years prior to the taxable transfer.
27
What is the formula for calculating the available nil rate band (NRB)?
Available NRB = Full NRB less cumulative total.
28
What happens to the basic NRB if a deceased passes their estate entirely to their surviving spouse before 9 October 2007?
The basic NRB would be wasted.
29
How does the TNRB benefit a surviving spouse after the first spouse's death?
The TNRB allows the surviving spouse to take advantage of the unused portion of the deceased's basic NRB.
30
True or False: The TNRB can be claimed in respect of a chargeable lifetime transfer made by the survivor.
False.
31
What is the maximum percentage of a full NRB that can be transferred when someone outlives multiple spouses?
Capped at 100% of a full nil rate band.
32
What is the full amount of the residence nil rate band (RNRB)?
£175,000.
33
What are the conditions for claiming the RNRB?
The deceased must have died on or after 6 April 2017, their death estate must include a qualifying residential interest (QRI), and the QRI must be closely inherited by a direct descendant.
34
What is a qualifying residential interest (QRI)?
A residential property interest that is part of the deceased’s estate immediately before death.
35
Fill in the blank: A beneficiary closely inherits from the deceased if they receive the QRI by _______.
gift under the will, operation of the law of intestacy, operation of the rules of survivorship.
36
Who qualifies as direct descendants for the RNRB?
* The deceased’s children
* Grandchildren
* Great-grandchildren
* Spouse or civil partner of any direct descendant
* Widow/widower of any direct descendant who has not remarried.
37
What is the effect of a net estate value exceeding £2 million on the RNRB?
There is a tapered withdrawal of the RNRB, reducing it by £1 for every £2 above the £2 million threshold.
38
What happens if the deceased's share in the property is valued at less than £175,000?
The RNRB amount is capped at the value of the property.
39
What is required for the PRs of the surviving spouse to claim the TNRB?
They must make a claim in the IHT return within two years of the end of the month of death.
40
How does the TNRB benefit the estate of the surviving spouse if the NRB increases after the first spouse's death?
The TNRB is calculated based on the NRB amount at the date of the survivor's death, which may be higher.
41
What must PRs do if they survive more than one spouse and want to claim TNRB?
A separate claim must be made for each TNRB.
42
What is the cumulative total in the context of IHT?
The total chargeable value of all chargeable transfers made in the previous 7 years.
43
What is the full amount of the RNRB available if the family home is worth more than the RNRB?
The full amount of the RNRB is available.
## Footnote
RNRB stands for Residence Nil Rate Band.
44
How much can the man use from his NRB and RNRB to cover his estate?
He can use both his NRB of £325,000 and RNRB of £175,000.
## Footnote
Together they cover the value of the man’s estate.
45
What can happen with unused Residence NRB?
It can be transferred to a surviving spouse.
## Footnote
This applies if the pre-deceased spouse did not use their own RNRB.
46
Under what conditions can a transferred RNRB be claimed?
The survivor must leave a QRI to a direct descendant.
## Footnote
QRI stands for Qualifying Residential Interest.
47
What is the maximum RNRB after transferring unused RNRB?
An estate may qualify for a RNRB of £350,000.
## Footnote
This is based on the full transfer of £175,000 from both spouses.
48
What happens to the RNRB for estates worth more than £2 million?
The RNRB is reduced by £1 for every £2 in excess of £2 million.
## Footnote
No RNRB can be claimed for estates worth £2,700,000 or more.
49
What are the downsizing rules related to RNRB?
They allow an estate to qualify for a full RNRB even if the deceased did not own a QRI at death.
## Footnote
This includes cases where the deceased downsized to a less valuable QRI.
50
What conditions must be met for RNRB downsizing addition?
The deceased must have downsized after July 2015 and a direct descendant must inherit the new QRI.
## Footnote
The addition is calculated based on the lost RNRB due to downsizing.
51
What is the maximum combined NRB a person's estate can qualify for?
A total NRB amount of £1 million.
## Footnote
This includes both NRB and RNRB from both spouses.
52
What is a Potentially Exempt Transfer (PET)?
A lifetime transfer of value that becomes chargeable if the transferor dies within seven years.
## Footnote
The transfer is not chargeable at the point it is made.
53
What is a Lifetime Chargeable Transfer (LCT)?
A chargeable transfer when made, subject to IHT at a lifetime rate of 20%.
## Footnote
LCTs are relevant for transfers into trusts on or after March 22, 2006.
54
How is the cumulative total calculated for IHT on lifetime transfers?
By adding up the value of all chargeable transfers made in the 7 years prior to the transfer.
## Footnote
This influences the amount of NRB available.
55
What is the basic NRB amount fixed at since April 2009?
£325,000.
## Footnote
This amount should be used unless specified otherwise.
56
What is the tax rate on LCTs when calculating IHT due immediately?
20%.
## Footnote
This applies when the transferor survives 7 years after the LCT.
57
What is the tax rate on failed PETs and re-assessed LCTs?
40%.
## Footnote
Taper relief may apply if the transferor dies 3-7 years after making the transfer.
58
What exemptions and reliefs are applicable when calculating IHT on lifetime transfers?
* Spouse exemption
* Charity exemption
* Family maintenance exemption
* Annual exemption
* Small gifts allowance
* Normal expenditure from income
* Marriage exemption
* Business property relief
* Agricultural property relief
* Taper relief
## Footnote
Apply these exemptions in the order of relevance.
59
What is the chargeable value of a gift after applying exemptions?
It is the value of the gift minus the total value of exemptions applied.
## Footnote
This determines the taxable portion for IHT.
60
What is an LCT?
Lifetime transfers into a trust
61
What is a PET?
Lifetime transfers to an individual
62
What is the tax rate for LCTs?
20%
63
What is the first step in calculating IHT for an LCT?
Calculate the cumulative total
64
What is the second step in calculating IHT for an LCT?
Identify the value transferred
65
What is the third step in calculating IHT for an LCT?
Apply exemptions and reliefs
66
What is the fourth step in calculating IHT for an LCT?
Apply basic NRB and calculate tax at the appropriate rate
67
What happens if the transferor dies within 7 years of an LCT?
The LCT must be reassessed
68
What is the death tax rate applied to LCTs if the transferor dies within 7 years?
40%
69
What is Step E in the reassessment process for LCTs?
Apply taper relief
70
What is Step F in the reassessment process for LCTs?
Give credit for tax paid in lifetime
71
What must be deducted when giving credit for tax paid in lifetime during LCT reassessment?
IHT paid previously
72
What is the cumulative total for the IHT calculation if a PET has failed?
Chargeable value of the failed PET
73
What is the annual exemption (AE) for the year of the LCT?
£3,000
74
What is the nil rate band (NRB) amount for IHT?
£325,000
75
What is the formula for calculating the chargeable value after applying exemptions?
Value transferred - Total exemptions
76
What is the total IHT payable after reassessing an LCT with a prior tax payment?
Tax due after taper relief minus tax paid in lifetime
77
Fill in the blank: If IHT is payable as a result of a lifetime transfer, the transferor pays the tax in addition to the gift itself, this is known as _____
Grossing Up
78
True or False: PETs are chargeable unless the transferor dies within 7 years.
False
79
What is the impact of taper relief on IHT due?
Reduces the amount of IHT payable
80
What must be done if the balance of tax due is reduced to nil after crediting previous payments?
No further tax is payable
81
What is the key difference between LCTs and PETs regarding IHT chargeability?
LCTs are immediately chargeable; PETs are only chargeable if the transferor dies within 7 years
82
What does IHT stand for?
Inheritance Tax
83
What is the first step in calculating IHT on a death estate?
Calculate cumulative total
84
What is the purpose of calculating the cumulative total?
To determine how much of the nil rate band (NRB) is available
85
What are chargeable transfers?
Transfers made in the 7 years prior to death that may incur IHT
86
What is the nil rate band (NRB)?
The threshold below which no IHT is payable
87
What is included in the taxable estate for IHT purposes?
All property to which the deceased was beneficially entitled at the date of death
88
True or False: The taxable estate always equals the succession estate.
False
89
Name three types of property included in the taxable estate.
* All jointly owned property
* Property subject to a reservation
* Donationes mortis causa
90
What happens to jointly owned property for IHT purposes?
The deceased's share is included in their taxable estate
91
What is a donationes mortis causa (DMC)?
A lifetime gift made conditional on death
92
What must be deducted from the taxable estate to calculate IHT?
* Debts due at the date of death
* Reasonable funeral expenses
* Cost of a tombstone
93
What exemptions and reliefs can be deducted from the taxable estate?
* Spouse exemption
* Charity exemption
* Business property relief (BPR)
* Agricultural property relief (APR)
94
What does RNRB stand for?
Residence Nil Rate Band
95
What is the tax rate applied to the remaining taxable estate after NRB?
40%
96
Fill in the blank: The total chargeable value of all chargeable transfers made in the previous 7 years is called the _______.
cumulative total
97
What is the value of the estate generally based on?
Market value at the date of death
98
In valuing jointly owned property, what deduction is typically applied?
10-15% to reflect the difficulty of selling a share
99
How are quoted shares valued for IHT purposes?
Based on stock exchange prices on the date of death
100
What is the treatment of insurance policies written in trust for a third party?
Not included in the deceased's estate for IHT purposes
101
What is the importance of the date of death value for assets?
It determines the taxable value of the estate
102
What is a 'gift with reservation of benefit' (GROB)?
A situation where a donor retains a benefit from an asset they have given away
103
What happens to the value of an interest in possession trust for IHT if created before 22 March 2006?
Included in the life tenant's taxable estate
104
What is the treatment of discretionary pension scheme payments for IHT?
Not included in the taxable estate
105
What type of expenses can be deducted post-death for IHT calculations?
Reasonable funeral expenses and cost of a tombstone
106
What happens if a life tenant with an immediate post-death interest dies?
The capital value of the trust is included in their taxable death estate
107
What must be done regarding transferred NRB during the IHT calculation?
Establish the value and apply it against the remaining taxable value
108
What is a PET?
A PET is a Potentially Exempt Transfer, which is a lifetime gift that is not immediately chargeable to inheritance tax.
109
What is the value of Rachel Fern's house?
£500,000
110
What is the total value of Rachel's estate before deductions?
£730,000
111
What deductions are allowed for debts/liabilities in Rachel's estate?
Funeral costs (£3,500) and credit card debt (£2,000)
112
What is the net taxable estate for Rachel Fern after deductions?
£724,500
113
What are the two exemptions applied in Rachel's inheritance tax calculation?
* Charity Exemption (£20,000) * Spouse Exemption (£250,000)
114
What is the value of the estate chargeable to tax for Rachel Fern?
£454,500
115
What is the amount of the basic Nil Rate Band (NRB) available for Rachel?
£281,000
116
How is the inheritance tax (IHT) on Rachel's estate calculated on the remaining balance?
IHT is charged at 40% on the amount above the NRB.
117
What is the total IHT due on Rachel's estate?
£69,400
118
What is the effect of lifetime transfers on the death estate?
The timing of lifetime transfers affects the total IHT payable.
119
What does LCT stand for?
LCT stands for Lifetime Chargeable Transfer.
120
True or False: A PET becomes chargeable if the transferor dies within 7 years.
True
121
What is Taper Relief?
Taper Relief reduces the tax payable following death for lifetime transfers if the transferor survives 3-7 years.
122
In Example 1, how much tax is payable on the death estate?
£70,000
123
In Example 2, how much tax is left to pay after considering the lifetime transfers?
£5,000
124
Fill in the blank: The chargeable value of the LCT in Example 5 is _______.
£350,000
125
What happens to the NRB if the LCT is less than 7 years old?
The NRB is reduced by the chargeable value of the LCT.
126
What is the total tax payable in Example 5?
£249,000
127
What is the primary liability for tax on lifetime transfers?
The transferee bears the tax liability.
128
What is the significance of the 7-year rule in inheritance tax?
Transfers made within 7 years of death are subject to IHT.
129
What does 'failed PET' refer to?
A failed PET is a potentially exempt transfer that becomes chargeable if the transferor dies within 7 years.
130
How does the timing of lifetime transfers affect the IHT?
It impacts the cumulative total on death and the overall tax payable.
131
What is the charge to inheritance tax (IHT) for Lifetime Chargeable Transfers (LCT)?
LCT is charged when made and later if re-assessed following the death of the transferor within 7 years of making the transfer.
132
What is the charge to inheritance tax (IHT) for Potentially Exempt Transfers (PET)?
PET is not charged when made, but later following the death of the transferor within 7 years of making the transfer (failed PET).
133
What event triggers a deemed transfer of the death estate for IHT?
Death triggers a deemed transfer of the death estate on the date of death.
134
Who is generally liable to pay IHT for an LCT during the lifetime of the transferor?
The person in whom the assets vest (donee) is usually liable to pay IHT.
135
Who becomes liable to pay IHT if the trustees do not pay the tax for an LCT?
The donor becomes liable or may elect to pay the tax.
136
What is meant by 'grossing-up' in the context of IHT?
Grossing-up means notionally increasing the original value of the transfer to calculate IHT payable.
137
What is the liability for IHT due from failed PETs and LCTs after a donor's death?
The lifetime recipient (donee) is liable to pay the IHT due.
138
What happens if the recipient of the lifetime transfer does not pay the IHT due?
The deceased’s personal representatives (PRs) will become liable.
139
What is the general rule for IHT on the free estate?
IHT is a general testamentary and administration expense payable from residue unless a contrary intention appears in the will.
140
How are gifts in a will usually treated regarding IHT?
Gifts in a will are deemed to be given 'free of tax' unless stated otherwise.
141
What constitutes a contrary intention in a will regarding IHT?
It is determined as a matter of construction of the terms of the particular will.
142
What is the allocation of exemptions in the context of IHT?
If part of an estate qualifies for an exemption, it complicates determining where the burden of IHT falls.
143
Who is liable for IHT on joint tenant property after the death of a co-owner?
The surviving co-owner is liable for IHT.
144
What is the statutory requirement for the spouse exemption in IHT?
The spouse exemption is outlined in s 18 of the Inheritance Tax Act 1984.
145
When can certain exemptions and reliefs be applied?
Some exemptions apply only to transfers made during the donor’s lifetime, while others apply only to the death estate.
146
What is the importance of knowing IHT exemptions and reliefs as a practitioner?
It is crucial for personal tax planning and ensuring proper tax calculations.
147
What is the main consequence of failing to advise on the effective use of IHT exemptions and reliefs?
It may result in solicitor negligence.
148
What is the importance of knowing IHT exemptions and reliefs?
It is important to know which exemptions and reliefs exist, when each will apply, and any criteria that must be satisfied before they can be used.
149
What are common reasons clients seek tax advice?
* Personal tax planning
* Calculating tax liabilities
* Making a will or setting up a trust
150
What could happen if a solicitor fails to advise on exemptions and reliefs?
The solicitor may be considered negligent.
151
What does the table summarizing IHT exemptions and reliefs include?
* Lists all IHT exemptions and reliefs
* Confirms when each can be used (lifetime, death, or both)
152
Which exemptions are available for lifetime transfers only?
* Annual exemption
* Family maintenance exemption
* Small gifts exemption
* Marriage exemption
* Normal expenditure out of income exemption
* Taper relief
153
What is the Annual Exemption (AE) for IHT?
The AE allows individuals to make gifts of up to £3,000 each tax year free from IHT.
154
How is the Annual Exemption applied to transfers?
The AE is applied chronologically to transfers when they are made, and if multiple transfers occur on one day, it is applied pro rata.
155
What happens to unused Annual Exemption from the previous tax year?
If the current year's AE is fully used, a transferor may look back to the previous tax year and use any part of the AE that was not used.
156
What is the maximum AE that can be available for a transfer?
A maximum of 2 x AE (£6,000) may be available if no other transfers have been made in that tax year or the previous tax year.
157
Fill in the blank: The Annual Exemption allows gifts of up to _______ each tax year free from IHT.
£3,000
158
What type of payments are not treated as transfers for IHT purposes under the Family Maintenance exemption?
* Payments to a spouse
* Payments to a minor child for maintenance, education, or training
* Payments to a dependent relative for reasonable care
159
What is the Small Gifts Allowance under IHT?
Small gifts of up to £250 per recipient can be made free from tax.
160
True or False: The Small Gifts Allowance can be combined with the Annual Exemption.
False
161
What is the Marriage Exemption under IHT?
Gifts made in consideration of a marriage are exempt up to specified amounts depending on the relationship of the donor to the recipient.
162
What are the maximum amounts for the Marriage Exemption?
* £5,000 from a parent
* £2,500 from one party of the marriage to the other
* £2,500 from a remoter ancestor
* £1,000 in any other case
163
What is the requirement for the Normal Expenditure out of Income exemption?
The transfer must be made from the donor's income, follow a normal pattern of giving, and not affect the donor's standard of living.
164
What does Taper Relief do?
Taper Relief reduces the amount of IHT payable on a lifetime transfer that becomes taxable after the donor's death.
165
What conditions must be met for Taper Relief to apply?
* The lifetime transfer was made 3-7 years before the donor's death
* IHT is payable on the lifetime transfer
166
What is the benefit of lifetime exemptions and reliefs?
They reduce or eliminate the IHT charge on lifetime gifts, potentially leaving a larger nil rate band for the death estate.
167
Which exemptions are available for both lifetime transfers and the death estate?
* Spouse exemption
* Charity exemption
* Business property relief
* Agricultural property relief
* Political party exemption
* Exemptions for gifts for national purposes or to heritage maintenance funds
* Exemption for gifts to EBTs
* Exemption for gifts to housing associations
168
What is the Spouse Exemption under IHT?
Gifts between spouses during life and following death are completely exempt if both parties are domiciled within the UK.
169
What does the spouse exemption (s 18 IHTA) entail?
Gifts between spouses during life and following death are completely exempt from IHT, with no upper limit if both are domiciled in the UK.
170
True or False: Unmarried couples can claim spouse exemption.
False
171
What is a conditional gift in the context of inheritance tax?
A gift that may be conditional, provided the condition is satisfied within 12 months of death.
172
In the example of a lifetime transfer of £1M and a death transfer of assets worth £3M, how is the spouse exemption applied?
Both transfers are entirely exempt from IHT.
173
What is a Life Interest Trust?
A trust where a surviving spouse receives a life interest, meaning they have the right to income from the trust.
174
What is a remainder interest in a Life Interest Trust?
The right to capital once the life interest ends.
175
When does the spouse exemption apply to a Life Interest Trust?
It applies if the surviving spouse receives a life interest.
176
What is the charity exemption (s 23 IHTA)?
All transfers to registered charities during life and after death are exempt from IHT, provided the gift is used exclusively for charitable purposes.
177
What is required for a gift to qualify for charity exemption?
The gift must be immediate and not in remainder.
178
What is the reduced rate of IHT when leaving at least 10% of the estate to charity?
36% instead of 40%
179
What type of gifts are exempt under s 24 IHTA?
Gifts to established political parties.
180
What must a political party have to qualify for IHT exemption?
At least two MPs elected or one MP and at least 150,000 votes.
181
What is the exemption for gifts of land to housing associations (s 24A IHTA)?
Gifts of land to housing associations or registered social landlords are exempt from IHT.
182
What are gifts for national purposes (s 25 IHTA)?
Gifts made for designated 'national purposes' are exempt from IHT.
183
What are heritage maintenance funds (s 27 IHTA)?
Trusts that maintain historic buildings or land of scenic, scientific, and historic interest, exempt from IHT.
184
What is the exemption for gifts to Employee Benefit Trusts (s 28 IHTA)?
Transfers of shares made into EBTs are exempt if they meet strict conditions.
185
What is Business Property Relief (BPR)?
A relief that reduces the IHT payable on qualifying business property.
186
What are qualifying business assets for BPR?
* Unquoted shares
* Quoted shares (if the taxpayer controls the company)
* Business or interest in a business
* Assets owned but used for business
187
What is the qualifying period of ownership for BPR?
The transferor must have owned the business assets continuously for at least 2 years prior to the transfer.
188
What is Agricultural Property Relief (APR)?
A relief that reduces the IHT payable on the agricultural value of qualifying assets.
189
What types of property qualify for Agricultural Property Relief?
* Agricultural land and buildings
* Farmhouses and cottages of appropriate character
190
What are the qualifying periods of ownership for APR?
* Occupied for agricultural purposes for 2 years before transfer
* Owned and occupied for agricultural purposes for 7 years before transfer
191
What is the effect of APR?
It reduces the taxable transfer value by the amount attributed to the agricultural property.
192
What is the treatment of a taxpayer’s period of ownership for inherited qualifying assets?
Usually treated as continuous.
193
When are inherited qualifying assets deemed to be acquired?
On the date of death of the deceased.
194
How is the ownership period treated for a surviving spouse inheriting property?
Deemed to have owned the property from when it was originally acquired by the deceased spouse.
195
What percentage of relief is available if the transferor was the owner-occupier?
100% relief.
196
Under what condition is 50% relief applicable?
Usually in respect of tenancies created before September 1995.
197
How long must a person occupy a farm for it to qualify for APR at 100%?
Two years of owner occupation.
198
How long must a tenant occupy a farm for it to qualify for APR at 100%?
Seven years of occupation.
199
In an APR scenario, what is the agricultural value of the land if the estate includes land valued at £2 million?
APR of £2 million can be claimed.
200
What happens to the remaining estate value after claiming APR?
Taxed at 40% above the available NRB.
201
What conditions must be met for APR to apply to a lifetime transfer?
* Transferee must own the qualifying property
* Property must qualify for APR when the transferor dies.
202
What happens if a transferee sells part of a partnership interest before the transferor's death?
APR can still be claimed on the proportion retained by the transferee.
203
What relief takes priority when both APR and BPR apply?
APR takes priority.
204
What percentage of BPR applies to private company shares?
100% BPR.
205
What is the qualifying period for APR if the transferor occupied the property?
At least 2 years.
206
What is woodlands relief?
A deferral of the IHT that would otherwise be payable on the value of the woodland.
207
How long must a deceased have owned woodland for woodlands relief to apply?
At least 5 years.
208
What is the value considered for woodlands relief?
The value of the trees (timber), not the land itself.
209
What is Quick Succession Relief (QSR)?
Relief that helps where the same assets are subject to more than one IHT charge in quick succession.
210
What conditions must be met for QSR to apply?
* Death estate includes assets received by gift or inheritance
* Assets were subject to an IHT charge when transferred.
211
What happens if a death occurs within one year of a previous IHT charge for QSR?
Relief is calculated with reference to 100% of the amount of IHT paid previously.
212
What is the reduction percentage for IHT relief if death occurs 4-5 years after the original charge?
Only 20% of the amount of IHT paid previously is considered.
213
What is the significance of the nil rate band (NRB) in IHT?
It determines the threshold above which IHT is payable.
