D Reliefs Flashcards
Lifetime tax (Stage 1) tax is paid by?
Transferor (unless the transferee has elected to pay the tax)
Lifetime tax (Stage 1) tax is borne by?
Transferor (unless the transferee has elected to pay the tax)
Additional IHT on lifetime transfers arising on death (Stage 2) tax is paid by?
Transferee
Additional IHT on lifetime transfers arising on death (Stage 2) tax is borne by?
Transferee
IHT on death estate (Stage 3) tax is paid by?
Personal representatives
IHT on death estate (Stage 3) tax is borne by?
Beneficiary of the residue of the estate
IHT planning (exemptions)
Making the maximum use of available exemptions
IHT planning (gifts)
Making gifts as early as possible
Why make gifts as early as possible (survival)?
Increase likelihood of surviving for seven years that PETs don’t become chargeable and CLTs if exceeding NRB only incur lifetime tax of 20%
Why make gifts as early as possible (value)?
This will also fix the value of transfers at an earlier stage
IHT planning (gifts into trusts)?
Can be made up to the nil rate band without any immediate charge arising
Disadvantages of lifetime giving (asset)
Donor loses the right to use the asset
Disadvantages of lifetime giving (capital gains tax)
A transfer shortly before death is unlikely to achieve an IHT saving, but may well result in an unnecessary capital gains tax liability
Death estate tax planning (rearrange loans)
It may be possible to rearrange loans or mortgages away from qualifying property in order to maximise relief
Death estate tax planning (direct descendants)
There can be a benefit in arranging or rearranging a will to maximise the available tax-free inheritance (homes left to direct descendants)
When will IHT only be charged once in terms of generation?
IHT will only be charged once when the grandchildren inherit the assets on the death of the grandparent.
It would be charged twice if first inherited by grandparent’s children
How are tuition fees to a son treated?
Payment could be exempt without any cash limit unde rnormal expenditure out of income exemption
If a spouse remarries what can happen with the unused nil rate band when she dies?
Can be transferred to the spouse that survives her
PET for 22 February 2019 when death is 1 March 2024?
60%. As 5 to 6 years
When is there no inheritance tax benefit in making a lifetime gift (in terms of property)?
As property is not expected to increase in value in the near future
When is it beneficial to skip a generation?
Gifts are made to grandchildren rather than children
Why is making gifts to grandchildren rather than children seen as more beneficial?
Gifts will only be taxed once, rather than twice
Is changing the terms of her will so that the residue of her estate goes to her grandchildren rather than her children effective for reduce IHT on estate?
Not effective
Is making lifetime gifts to trusts up to the value of the nil rate band every seven years effective for reduce IHT on estate?
Effective
Changing the terms of her will so that the residue of her estate goes to her husband rather than her children effective for reduce IHT on estate?
Effective
Making lifetime gifts to her grandchildren early in life effective for reduce IHT on estate?
Effective
When is lifetime tax deducted in stage 2 of the IHT computation?
On CLTs, never PETs
