IHT Flashcards
Unable to settle an IHT liability?
Borrow against value of estate /use own assets.
Apply to investment provider/Debt management office to use assets to pay IHT directly to HMRC.
IHT can be paid by transferring national heritage property/the art work to the crown.
It could be paid in instalments over 10 year/10% each year if house is kept and lived in.
If it is not paid by the due date interest will be charged/financial penalties.
In the event that a beneficiary of a PET is unable to settle her liability as no assets, the estate will become liable.
When is the IHT tax paid on to avoid any penalties?
IHT must be paid by the end of the 6th month after the individuals death,
How are EIS treated for IHT purposes?
EIS are included to taper against the RNRB however they are not liable to IHT tax.
What are the rules for James to qualify for RNRB
The main residence must be inherited by the direct descendants.
The use of PETs in the years prior do not have an impact on the RNRB qualification.
RNRB will be reduced if estate is over £2million. £1 for every £2.
It will be protected if downsize is required/stops owning house - provided assets of the equivalent value are passed to direct descendants.
The amount is £125,000 for 18/19.
Impact of divorce on Will?
Divorce does not revoke will or invalidate other entitlements.
Divorce will cancel benefits to ex spouse, unless the wording states that divorce should not affect entitlement.
At the time of divorce the ex spouse is removed as an executor and another executor will be required to be appointed before the estate is administered.
Duties of an executor?
Notify all relevant companies/organisations/people/register death.
Establish assets and debts of the estate.
Apply for the grant of probate.
Complete relevant IHT form (400)/IHT return.
Pay the IHT due.
Collect all money due to the estate.
Pay any outstanding bill, tax and debt.
Distribute the net estate according to the will.
Interest charged?
Bank of England base rate +2%
Deed of variation
Can be used if someone has died intestate or with a will.
As long as the person executing the variation is 18 and of sound mind.
The deed must refer to the intestacy being varied and signed by executor.
It must be executed within 2 years of the death.
It must contain a statement that the variation is to have effect for IHT as if the deceased had made it.
If the variation increase IHT payable, must be signed by the administrators.
There must be no consideration for money or monies worth.
Investment increasing whilst estate is in administration
Administrators/ Executors liable for 20%/28% CGT tax/trust rate on realised gains during the administration period.
Administrator/executors are deemed to have received the shares at the market value at the date of death/probate value.
CGT exemption available 11,700 in the tax year of death in addition to the next 2 tax years.
Losses can be carried back 3 preceding tax years.
