IHT Flashcards
When is the extra IHT on GCTs on death due and who by?
6 months from the end of the month of death. Payable by donee
When is IHT on death estate due and by whom?
12 months from the end of month of death with interest chargeable from 6m from end of month of death
Payable by executors of estate
What are the rules to determine the value of quoted shares for IHT?
The lower of
- the quarter up rule
lower quoted price + 1/4 (higher quoted price - lower quoted price) - The average of the highest and lowest marked bargains on the day of the transfer
How do you value unquoted shares for IHT?
Value of holding prior to transfer
Less value of holding after transfer
= Transfer value
Indicate the amount to include in death estate for the following trusts
a) Deceased is covered by policy and the beneficiary is written into trust
b) Deceased is covered by policy but no beneficiary written into trust
c) Someone other than the deceased is covered by policy
a) Ignore in death estate as beneficiary will get proceeds automatically
b) Include proceeds in death estate
c) Include market value at date of death in death estate
How do you calculate the value of a related property asset (not shares) for IHT?
The higher of
- stand alone value held by deceased
- related value of property
A/(A+B) * C
where
A = Standalone value
B = value held by RP
C = Value of whole property
How do you calculate the value of a related property asset (shares) for IHT?
The higher of
- stand alone value held by donor before and after disposal
no shares held before x value per share
less
no shares held after x value per share - related value of shares before
(no shares held by donor + spouse / charity / political party) before transfer x value per share
less
(no shares held by donor + spouse / charity / political party) after transfer x value per share
What are the Quick Succession Relief formulas & in what situations can they be applied?
QSR is given if an asset/estate is taxed twice in a period of 5 years
Relief is deducted from the tax liability
QSR on the entire estate = Tax paid on the earlier transfer * (Net Gross Transfer/Gross Transfer) * Relevant %
QSR on a specific asset = (Tax paid on the first estate / Gross value of first estate ) * Net transfer * relevant %
In what situation can IHT be reduced to 36%?
If an individual dies and leaves 10% of net chargeable estate to charity
Net chargeable estate = Value of estate less exemptions & NRB but not less QCD & RNRB
When does a transfer qualify for Business Property Relief?
R relevant property*
O - ownership > 2Y
S - selling on contract denies relief
E - excepted assets* (BPR is restricted as some assets are not used for business)
Relevant property look in tax tables
Excepted assets, need to apply formula:
Net assets less investments / net assets
When does a transfer automatically not qualify for Business Property Relief?
If the company is not a trading co
There is a contract to sell the company
In what situations is Business Property Relief subject to a clawback clause?
If the donee
What are the domicile rules for IHT?
Deemed UK Domicile if any of the following apply;
- Have been UK resident for 15/20 Y
- Were UK dom at any time in past 3Y
- Resident in current or past 3Y
- Have a UK domicile of origin
What is the restriction of DTR on IHT?
Lower of o/s tax paid and UK tax paid
o/s tax paid given in Q
UK tax paid = IHT/Estate before NRB applied
How is the value of the overseas asset calculated in DTR for IHT?
Lower of 5% of MV or 5000
Asset is always included at MV at date of death
