IHT

Question 1

Are foreign assets included in IHT?

Answer 1

Yes, if was UK domiciled

Question 2

Which assets are included in IHT for non-UK domiciled individuals?

Answer 2

Only those within the UK

Question 3

When will those not UK domiciled at death also have to pay IHT?

Answer 3

If they were resident for 10/past 20 tax years

Question 4

What is the nil-rate band amount?

Answer 4

322k

Question 5

What is standard IHT amount?

Answer 5

40%

Question 6

What property is included in estate for IHT purposes?

Answer 6

GROBS

Property under will/intestacy

Share of joint tenancy (deemed severed at death for tax purposes)

Nominated property (e.g., national savings and friendly society)

Mortis causa

Life tenant of interest in position trust entitled to income (# amount in trust proportionate to the income proportion)

Question 7

What property is excluded for IHT?

Answer 7

Remainderman dying before life tenant

Property which deceased was not beneficially entitled immediately before death (proceeds of life insurance, discretionary lump payments from pension fund)

Question 8

If 2 non-spouses die at the same time, who is deemed to die first?

Answer 8

Oldest

Question 9

If 2 spouses die at the same time, who is deemed to die first?

Answer 9

Spouse exemption applies but oldest still deemed to die first so the estate of the younger one is taxed

Question 10

What is the date from which the estate will be valued?

Answer 10

Open market value immediately before death

Question 11

How are quoted shares valued?

Answer 11

The lower of the 2 quoted prices on stock exchanges daily list plus 1/4 the difference between them

Question 12

How are unquoted shares valued?

Answer 12

Expert assessment

Question 13

How is interest in jointly/commonly held property assessed?

Answer 13

10-15% discount

*except if owned by spouse then there is no discount

Question 14

What debts are deductible from estate value?

Answer 14

Tax, utility bills etc

Liability for damages in tort

Unpaid income tac and CGT on pre-death income

Question 15

Can you deduct funeral costs e.g., tombstone from estate value?

Answer 15

Yes, if reasonable

Question 16

Are estate administration costs deductible from the overall estate value?

Answer 16

No

Question 17

How can you get a reduced IHT rate via charity?

Answer 17

If you leave at least 10% to charity of net there will be only 36% IHT

Question 18

How does transferring nil rate band work?

Answer 18

If spouse dies first can transfer the unused portion

Question 19

How is the amount of unused nil-rate calculated?

Answer 19

PERCENTAGE of unused amount is transferred

Question 20

How much is the RNRB?

Answer 20

175k – increasing every year with CPI

Question 21

Do you need to have kids to claim RNRB?

Answer 21

Yes, must have direct descendants

Question 22

What is tapered withdrawal of RNRB?

Answer 22

Reduces by 1 pound for every 2 pounds over 2 million

Question 23

Can you use the RNRB towards multiple properties?

Answer 23

No

Question 24

Can you transfer unused RNRB to your spouse?

Answer 24

Yes

Question 25

How is value of property calculated for RNRB purposes?

Answer 25

Market value at date of death MINUS mortgage

Question 26

What is the spouse exemption?

Answer 26

Anything passing to spouse is 100% exempt from IHT

Question 27

What happens when a spouse is not UK domiciled for spouse exemption?

Answer 27

Spouse exemption does not apply But they can elect to be treated as UK domiciled for IHT purposes

Question 28

How does the spouse exemption work if they are left a life interest in a trust for income, capital remainder to children?

Answer 28

Whole trust is exempt under the spouse exemption

Question 29

Gifts to which institutions are exempt?

Answer 29

Charities Political parties Public benefit For national purposes

Question 30

What is the annual exemption?

Answer 30

3k gifts per tax year are exempt

Question 31

How far forward can an annual exemption be carried?

Answer 31

Backdate only 1 year

Question 32

What is the small gift exemption?

Answer 32

Unlimited number of gifts under 250 pounds can be made without IHT Cannot be combined with annual exemption

Question 33

What are the marriage gifts?

Answer 33

Parents - 5k Grandparents + remoter = 2500 Non-relatives = 1k

Question 34

What is a PET?

Answer 34

Transfer made prior to the 7 years prior to death

Question 35

What happens to a PET if a transferor dies within 3 years?

Answer 35

Full rate

Question 36

What happens if PET is made 3-4y before death?

Answer 36

80% of death rate charge (40%) = 32%

Question 37

What happens if a PET is made 4-5y B4 death?

Answer 37

60% of death rate charge (40%) = 24%

Question 38

What happens if a PET is made 5-6y B4 death?

Answer 38

40% of death rate charge (40%) = 16%

Question 39

What happens if a PET is made 6-7y B4 death?

Answer 39

20% of death rate charge (40%) = 8%

Question 40

When does quick succession relief apply?

Answer 40

When a person dies within 5 years of having received a chargeable transfer and that transfer increased the value of the estate and IHT was originally paid

Question 41

How do you calculate QSR?

Answer 41

Deduct tax already paid on first transfer from the gross estate amount Divide that number by the gross estate amount Then multiply that by the amount of tax paid

Question 42

How does the QSR relief taper

Answer 42

100% 1y 80% 1-2 60% 2-3 and so on

Question 43

What happens iff QST exceeds IHT due?

Answer 43

Pay nothing

Question 44

In what situations does QSR not apply?

Answer 44

When the 1st transfer fell under and exemption When was chargeable but not paid cause it was below threshold If not IHT was payable on the deceaseds death If transfer was more than 5y before the first donor

Question 45

What are chargeable lifetime transfers?

Answer 45

E.G, transfers to trustees

Question 46

What are the trustee transfer rates?

Answer 46

20% if recipient pays 25% if donor pays

Question 47

What are the penalties for incorrect tax returns?

Answer 47

0-30% for careless mistakes 20 - 70% for deliberate errors 30-100% for deliberate errors with concealed assets

Question 48

How is IHT calculated if specific gifts bear their own tax?

Answer 48

IHT apportioned amongst individuals using the estate rate

Question 49

How is IHT calculated if treated as a testamentary expense?

Answer 49

Deducted from residue

Question 50

How do you calculate the estate rate?

Answer 50

IHT payable/net taxable estate = a % that % is then applied to each gift etc

Question 51

Who is liable for tax on chargeable transfers?

Answer 51

Generally the recipient IF NOT after 12mo PRs become liable

Question 52

What is the deadline to submit IHT400?

Answer 52

12mo from death Lifetime transfers: 12mo from end of lifetime transfer

Question 53

When is IHT usually due?

Answer 53

6mo after the end date of the month of death

Question 54

Which propertys qualify for paying by installment?

Answer 54

Land Business interest Quoted/unquoted shares Minority shareholdings

Question 55

When is the first instalment payment due?

Answer 55

60 from end of month of death

Question 56

How many instalments are standard, is there interest?

Answer 56

10 Yes -- from the date tax is due

Question 57

When is non-instalment IHT due?

Answer 57

On delivery of the account

Question 58

When paying by instalments, when can the grant of probate be granted?

Answer 58

After 1st instalment is paid

Question 59

What sequence to follow when calculating inheritance tax?

Answer 59

Value IHT estate (incl. joint property etc) Deduct liabilities Apply exemptions and reliefs (PET, QSR, BPR, GIFTS) Apply appropriate rate bands Pay IHT within 6m date of death