FLK 2 Tax

Question 1

IHT wills - RNRB

1. Amt
2. Rate
3. Who does it apply to

Answer 1

1. £325,000
2. 0%
3. only applicable when deceased main res. passes to direct descendants.
   When calculating liabilities, don’t forget to deduct liabilities like funeral expenses.

Question 2

First time buyer relief requirements (only related to res. property)

Answer 2

• buyer should be an individual (not corp entity)
• buyer must not have owned any type of property before (incl. gifted/ inherited prop anywhere in the world)
• the prop they intend to buy must be a single residential prop (house/ flat). It cannot be a mixed or commercial prop.
• purchase price must not be more than 500,000

Note: if shares in prop are less than 40,000 = exempt from additional rate.

Additional rate = 3% on top of standard rate

Question 3

How to calculate IHT estate rate?

What will the trustees pay IHT on?

Answer 3

Take the $ value of the 40% taxable amount and divide it by the total value of the assets (eg bequeathment + property) = estate rate in %.

Only bequeathment, which is bequeathment $ X estate rate %.
PR will pay only the remaining amount. I.e., $ left over X estate rate %.

Question 4

CGT on gain by sale of property for Trusts

Answer 4

• 2 executors or more = 1 combined CGT exemption. Exemption is for yr of death + 2 years.
• 1 executor/ admin = full annual exemption during admin period
• B not liable to pay CGT on inheritance.
• if B sells asset at later date + not main res. = CGT will arise in the normal way (as sale of any other asset). B must use own exemption amount and any available capital losses.

Question 5

When is an IHT payment due for wills?

Answer 5

First payment after 6 months from death. It can be paid in 10 annual instalments. IHT payment is due on:
- land
- business/ partnership shares
- quoted/ unquoted shares or securities in a company

Question 6

When do you lose/ reduced your principal private res relief?

Answer 6

Firstly, its only applicable to ur only/ main private res

Exemption is lost/ reduced if you havent lived in it during your period of ownership

Question 7

How to calculate what amount is SDLT charged on

Property amount = 1,500 = VAT
Paid monies = 1,200 + VAT
Mortgage assumed = 300

Answer 7

1200 + 240 (20% VAT) + 300 = 1740

That is what SDLT will be paid on (ie the chargeable consideration)

Question 8

IHT
If there are 2 monetary gifts (eg in 2018 and 2019) then you die in 2020 with an estate of X, how is the exemption calculated?

Answer 8

2018 gift may not have to pay IHT if it comes within the exempt band

2019 gift may/may not pay IHT, depends on how much exemption amt is remaining (ie unused from the 2018 gift)

last, estate value of 2020 is taken into consideration

Question 9

What is in a profit costs ledger?

Answer 9

Fees incurred by solicitor on a matter