IHT Exemptions and Reliefs Flashcards
What are the 4 Exemptions & Reliefs that apply to the Death estate for IHT ?
(1) SPOUSAL Exemption
(2) CHARITY Exemption
(3) BPR (Business Property Relief)
(4) APR (Agricultural Property Relief)
What is the ‘Spousal Exemption’?
Gifts / Transfers to a SPOUSE are EXEMPT from IHT (i.e. taxed at 0%)
What is the ‘Charity Exemption’?
Gifts / Transfers to a UK CHARITY are EXEMPT from IHT (i.e. taxed at 0%)
To qualify for ‘Business Property Relief’ (BPR), how long must property be OWNED for?
MIN 2 years BEFORE DEATH / TRANSFER
What 2 types of ‘Business Property’ will qualify for 100% IHT relief under BPR?
(1)
(a) OR (b)
(2)
(1) UNQUOTED shares
(a) PRIVATE shares OR
(b) PUBLIC UNLISTED shares
(2) Share of PARTNERSHIP / SOLE TRADER
What 2 types of ‘Business Property’ will qualify for 50% IHT relief under BPR?
(1)
(a) + (b)
(2)
(a) + (b)
(1) QUOTED shares
(a) PUBLIC LISTED shares +
(b) CONTROL of company (>50% voting rights)
(2)
(a) Land / Buildings / Plant / Machinery
(b) CONTROL of company (>50% voting rights)
Under BPR, what % of relief from IHT will the following be entitled to:
(1) Quoted shares
(2) Unquoted shares
(3) Private company shares
(4) Machinery in a company where D had control (>50% voting rights)
(1) 50%
(2) 100%
(3) 100% (type of ‘unquoted’ share)
(4) 50%
For a Lifetime transfer of a ‘business asset’ (e.g. shares) that fails (i.e. failed PET - transferor dies within 7y), to qualify for BPR what must the BENEFICIARY have?
Still OWN the property at TIME OF D DEATH
What type of Asset will NOT qualify for Business Property Relief (BPR)?
Investment Assets (e.g. rental property)
To qualify for ‘Agricultural Property Relief’ (APR) Agricultural land / property MUST be:
(a) for (b) years
OR
(c) for (d) years
OCCUPIED - for 2 years (before death / transfer)
or
OWNED - for 7 years
(1) What 2 things does ‘Agricultural Property Relief’ (APR) apply to?
(2) What % is the Relief?
(1)
(a) Agricultural LAND
(b) Agricultural PROPERTY (e.g. farmhouse)
(NOT machinery e.g. tractors - use BPR)
(2) 100%
What are the 5 Exemptions & Reliefs that apply ONLY to LIFETIME Transfers?
(1) ANNUAL Exemption (AE)
(2) FAMILY MAINTENANCE Exemption
(3) SMALL GIFTS Allowance
(4) NORMAL EXPENDITURE from INCOME
(5) GIFTS IN CONSIDERATION OF MARRIAGE Exemption
What is the ‘ANNUAL Exemption’?
Each TAX YEAR a transferor can transfer MAX £3,000 EXEMPT from IHT
Re the ‘ANNUAL Exemption’.
(1) How much is this?
(2) When does the Tax Year run from?
(3) How can the AE be increased?
(4) What allowance can the AE NOT be used with?
(1) £3,000
(2) April 6 to April 5
(3) Carry forward any UNUSED AE from PREVIOUS TAX YEAR (i.e. max £6,000)
(4) ‘Small Gifts Allowance’
What is the ‘FAMILY MAINTENANCE Exemption’. There are 2 strands.
NO IHT paid for TRANSFER to:
(1) CHILD (not grandchild) for ‘maintenance, education or training’ (in full time e/t if >18)
(2) Care for DEPENDENT RELATIVES
