IHT

Question 1

What value of passing assets to spouse is exempt from IHT?

Answer 1

All assets passed to spouse are exempt no matter the value

Question 2

Do pensions fall in the scope of IHT?

Answer 2

NO Pensions fall outside the scope

Question 3

IHT rate band?

Answer 3

40% flat rate

Question 4

What are PETS?

Answer 4

Potentially Exempt Transfers

Question 5

What are the conditions of PETs?

Answer 5

Gifted by one individual to another
Only chargeable if donor dies within 7 years
Death rate of 40%
Paid by donee

Question 6

What are CLTs?

Answer 6

Chargeable lifetime transfer

Question 7

What are the conditions of CLTs?

Answer 7

Any gift which is not exempt or a PET (gift to trusts)
Chargeable at date of gift
Additional IHT if donor dies within 7 years
Taxed at 20% or 25% lifetime rate
40% at death rate
Paid by trustee or donor (gross up gift for tax paid by donor)
Donee pays if donor dies

Question 8

How to calculate lifetime tax on CLTs

Answer 8

Transfer Value x
Wholly exempt transfers (x) spouse civil partner small gift
Specific exemptions x marriage, annual
CHARGEABLE TRANSFER X

Tax Calculation:
Chargeable transfer x
Less available NRB (x) £325,000 Reduce by CLT’s
TAXABLE AMOUNT X

Taxable rate at 20% where donee pays 25% where donor pays

Question 9

What is RNRB?

Answer 9

Residents nill rate band
for direct descendants

Question 10

What is the RNRB Value?

Answer 10

Lower of:
£175,000
or Value of property net of mortgage