IHT and CGT Flashcards
Does the Red Book contain guidance on IHT
Yes, it is included in VPGA15 of the Red Book UK National Supplement
What is the primary IHT Legislation
Inheritance tax act 1984
What section is the definition of MV included in
Section 160
Definition of MV
Price of property if sold on the open market at the date of death excluding an impact of the whole estate being put on the market
What is prudent lotting
Selling the estate in lots that would maximise the proceeds of sale
What is a joint tenancy
Tenants own joint equal rights in the whole property. Upon death the deceased’s interest passes onto the survivors in what is known as survivorship
What is a tenancy in common
An undivided share where 2 or more people with distinct different shares. When disposing of a share the other trustees must be consulted. Tenancy in common now known as a trust of sale and a trust of land
Name key case law
Duke of Buccleuch v IRC (Prudent lotting) Ellesmere v IRC (best value) White and Moss v IRC (undivided share) Clay v IRC (Special purchaser)
What is the taxable threshold
£325,000
What percentage of the estate is taxed
40%
Name exemptions to IHT
Estates under £325,000
Gifts over 7 years
Gifts to charities
Transfer to spouse
What is the primary Capital Tax Legislation
Taxation of Chargeable Gains 1992
Where is the definition of market value contained for capital tax
Section 272 of the TCG 1992
What is Capital Gains Tax
Tax on the gain made from the disposal of an asset
What are the tax rates for capital gains tax
18-28% for residential property
10-20% for non-residential property
What is the taxable threshold for capital gains
Gains of over £12,300
How is capital tax calculated
Gain made on an asset which has been adjusted for indexation
What is rebasing
In capital taxation it is assumed any asset held at 31 March 1982 has been sold and immediately reacquired at its market value on that date. The effect is that any gain are attributed to that period since then
Where is the definition of agricultural value contained for IHT
S115(3) of the Inheritance Tax Act 1984
What is the definition of agricultural value for inheritance tax
The agricultural value of any agricultural property shall be taken to be the value which would be the value of the property if the property were subject to a perpetual covenant prohibiting its use otherwise than as agricultural property
What were the 3 main findings of the Antrobus case
1) The restriction is unrelated to occupation or use of any particular agricultural land and is related to the occupier’s employment in agriculture “in the locality”.
2) the planning condition includes as acceptable occupiers those “last working” in agriculture and their widows and widowers
3) an OAC can be removed by the grant of planning permission.
What is a permitted area
An area falling under private residence relief for capital gains tax purposes. This area is under 0.5 hectares with anything over having to be of appurtenance to the reasonable enjoyment of the property and within the same curtilage.
What is a undivided share
A share in a property where there is no defined portion
What type of land does permitted area apply to
Applies to garden and grounds
