IHT - Death Estate Flashcards
How many steps in the process on calculating IHT on death estate?
7
What is the standard IHT rate?
0.4
What is the tax free NRB?
£325,000
What is the residence nil rate band?
£175,000 if passing onto direct descendants
Transfers to who are fully exempt from IHT?
Spouse and charities
What are the 7 steps in calculating IHT on death estate?
1) Calculate cumulative total, 2) Identify taxable death estate, 3) Value the taxable estate, 4) Deduct debts and funeral expenses, 5) Apply exemptions and reliefs, 6) Apply the residence nil rate band, 7) Apply NRB and calculate tax
What is done in calculating cumulative total?
Check if any failed PETs or chargeable LCTs exist within 7 years of death. Deduct from NRB.
Are trust interests included in death estate?
Yes
Are gifts with reservation of benefit included in death estate?
Yes
Are discretionary pension scheme payments included in death estate?
No
Are death bed gifts included in death estate?
Yes
Are life insurance policies held in trust included in death estate?
No
Are transfers to spouse included in death estate?
No
What are special rules applying to value of jointly owned property?
Discounted by 10% (unless owned by spouse).
How are quoted shares valued?
Using Stock Exchange rules.
What are allowable debt deductions?
Outstanding debts at death, reasonable funeral expenses, unpaid taxes owed by deceased.
What are non-deductible expenses?
Costs of administering estate, post-death debts.
What are the 2 main exemptions?
Spouse and charity.
What are the two main reliefs?
Agricultural property relief (50% or 100%), Business property relief (50% or 100%).
When is Residence Nil Rate Band usable?
If left to direct descendants.
What happens to unused spouse exemption?
Can be passed to surviving spouse.
