IHT Death Tax Proper Flashcards

1
Q

How to calculate IHT on Death?

A
  1. work out personal nil rate band left after CLT and PETs
  2. Add any Transferable Nil Rate band or Residence Nil Rate Band
  3. Work out chargeable assets in estate
    - Exemptions: gifts to spouse and charity
    - Business or Agricultural Exemptions
  4. (total nil rate band) - (net value chargeable assets)
  5. Tax at 40% (or 36% if 10% + to charity)
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

What assets are exempt from estate?

A

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 well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

How to value chargeable assets?

A

Open Market Value at date of death

EXCEPTION
- quoted shares (at Stock Exchange price on date of death)
- jointly owned land

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

How to Value jointly owned land on death?

A

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)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

What is deducted to get net value of estate assets?

A

Liability
- debts, income tax owed by deceased, reasonable funeral expenses

NOT ALLOWED
- probate costs

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

Rule of Gifts with Reservation of Benefit?

A

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

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

What happens if donor gives up benefit in asset they gifted before dying?

A

Treated as PET from date they gave up benefit and at market value of asset when they gave up benefit

How well did you know this?
1
Not at all
2
3
4
5
Perfectly