IHT Death Tax Proper Flashcards
How to calculate IHT on Death?
- work out personal nil rate band left after CLT and PETs
- Add any Transferable Nil Rate band or Residence Nil Rate Band
- Work out chargeable assets in estate
- Exemptions: gifts to spouse and charity
- Business or Agricultural Exemptions - (total nil rate band) - (net value chargeable assets)
- Tax at 40% (or 36% if 10% + to charity)
What assets are exempt from estate?
Gifts to spouse
- up to £325,000 if spouse is non-dom
Gifts to Charity
- uk/EEA charities
Business
- 50% quoted shares if control company or assets used in partnerhsip of own company
- 100% if unquoted shares or sole trader/parter intetest
Agriculatural
How to value chargeable assets?
Open Market Value at date of death
EXCEPTION
- quoted shares (at Stock Exchange price on date of death)
- jointly owned land
How to Value jointly owned land on death?
Held with Spouse
- related property rule used
- take percentage of total value as held by spouses
Not Held with Spouse
- value share as stand alone basis
- worth less as jointly held (normally 5-15% less)
What is deducted to get net value of estate assets?
Liability
- debts, income tax owed by deceased, reasonable funeral expenses
NOT ALLOWED
- probate costs
Rule of Gifts with Reservation of Benefit?
Gifts donor gives they they derive some benefit from are treated as still being part of estate and IHT must be paid on it
- ONLY if have benefit at date of death
EXCEPTION
- if they pay market rent
What happens if donor gives up benefit in asset they gifted before dying?
Treated as PET from date they gave up benefit and at market value of asset when they gave up benefit