IHT

Question 1

State the action that could have taken to immediately reduce the impact of
IHT on a persons estate following the death of someone with IHT liability

Answer 1

• Redirect inheritance via a Deed of variation (DOV)/disclaimer.
• Increase the cover on existing whole of life policy.
• Take out a new 3-year term assurance policy to cover the nil rate band (NRB)
  until the gift into the discretionary trust falls out of charge.

Question 2

Explain the responsibilities Personal Representatives have in respect of the
reporting and payment of the IHT liability on deceased estate

Answer 2

• calculate the net value of the estate
• including details of the any previous CLT within 7 years
• and quick succession relief (QSR)
• report this to HM Revenue & Customs
• by completing IHT400
• within 12 months of death.
• Any tax due should be paid by the end of the 6th month after death.

Question 3

Explain briefly the extent to which Personal Representatives can access the assets
in the estate prior to the payment of IHT

Answer 3

• Personal Representatives are generally unable to access the assets in the estate
• until they have obtained a Grant of Probate
• which they cannot apply for until IHT has been paid
• except the current account which may be used to pay the tax directly to HM Revenue & Customs under the Direct Payment Scheme

Question 4

State the penalties payable for late reporting of an IHT account.

Answer 4

• Initial £100 for late delivery of the account
• Additional £100 if delivered between 6 and 12 months late.
• Further penalties of up to £3,000 after 12 months.

Question 5

What tax is payable on gilts for a person who is UK domiciled but not UK resident

Answer 5

Zero / gilts are not subject to IHT if the owner is a non-UK resident - Even if they are UK domiciled