IHT Exemptions & Reliefs (Death Only) Flashcards
What is the main benefit of Quick Succession Relief (QSR)?
A) It allows assets to be passed on tax-free if inherited twice within 7 years
B) It applies to all inherited assets regardless of previous tax liability
C) It ensures that no IHT is payable on an inherited estate if the deceased was over 80
D) It reduces IHT on assets inherited within 5 years, based on the time between deaths
D) It reduces IHT on assets inherited within 5 years, based on the time between deaths
Explanation: QSR provides a reduction in IHT where assets have already been taxed in the past 5 years. The closer the two deaths, the greater the relief.
Under Woodlands Relief, what happens to the IHT on the woodland’s timber value?
A) It is deferred until the timber is sold or gifted
B) It is waived if the woodland is passed to a direct descendant
C) It is reduced to a flat rate of 10%
D) It must be paid immediately on the deceased’s death
A) It is deferred until the timber is sold or gifted
Explanation: Woodlands Relief does not eliminate IHT but defers it until the timber is sold or gifted. The land value is still subject to tax unless another relief (e.g., APR or BPR) applies.
Which of the following is a key requirement for Woodlands Relief to apply?
A) The woodland must be left to a spouse
B) The woodland must have been owned for at least 2 years before death
C) The deceased must have owned the woodland for at least 5 years unless inherited
D) The woodland must be used exclusively for commercial purposes
C) The deceased must have owned the woodland for at least 5 years unless inherited
Explanation: If the woodland was purchased, it must have been owned for at least 5 years before death. If it was inherited, no ownership period is required.
What is the QSR relief percentage if the second death occurs exactly 3 years after the first inheritance?
A) 100%
B) 60%
C) 40%
D) 20%
B) 60%
Explanation: If the second death occurs within 3 years, the QSR rate is 60%. The relief rate decreases over time as follows:
1 year = 100%
2 years = 80%
3 years = 60%
4 years = 40%
5 years = 20%
Jake inherited a business estate from his father 4 years ago. IHT was paid at that time. He now dies, leaving the estate to his children. What relief applies?
A) QSR at 20%
B) BPR at 50%
C) APR at 100%
D) QSR at 40%
D) QSR at 40%
Explanation: Since Jake inherited the estate 4 years ago, QSR applies at 40%, reducing the IHT on his children’s inheritance.
Sophie inherited farmland from her aunt 3 years ago. IHT was paid. She dies today, leaving the land to her children. What reliefs should be applied?
A) Woodlands Relief and APR
B) QSR and BPR
C) APR and QSR
D) QSR and Woodlands Relief
C) APR and QSR
Explanation: APR applies because the land is agricultural. QSR applies because the farmland was inherited 3 years ago, and IHT was paid. Woodlands Relief would only apply to timber, not farmland.
Adam owns a woodland that he inherited from his uncle 2 years ago. He dies today, leaving it to his daughter. What should his executors consider?
A) Woodlands Relief, because no minimum ownership period applies when inherited
B) BPR, because all woodlands automatically qualify for business relief
C) QSR, because the woodland was inherited 10 years ago
D) APR, because all woodland is considered agricultural
A) Woodlands Relief, because no minimum ownership period applies when inherited
Explanation: If the woodland was inherited, there is no required ownership period for Woodlands Relief to apply.
Brian inherited an estate from his mother 1 year ago, on which IHT was paid. He dies today, passing the estate to his daughter. How much QSR relief applies?
A) 20%
B) 40%
C) 60%
D) 100%
D) 100%
Explanation: Since Brian died within 1 year of inheriting the estate, QSR at 100% applies, meaning all IHT paid on the first inheritance is fully deducted from the second IHT liability.
Emma inherited a woodland 6 years ago and sells the timber before she dies. Can her estate still claim Woodlands Relief?
A) No, because the woodland was owned for over 5 years
B) No, because the timber was sold before death
C) Yes, because Woodlands Relief applies to all woodlands regardless of ownership time
D) Yes, but only if the timber had not yet been sold
B) No, because the timber was sold before death
Explanation: Woodlands Relief only applies to timber, not land. If the timber was sold before death, there is no IHT deferral available.
George owned a large area of woodland, which he used for commercial timber production. He died and left it to his son. What is the best IHT relief available?
A) Woodlands Relief
B) QSR
C) BPR
D) APR
C) BPR
Explanation: Since George used the woodland for commercial timber production, BPR applies at 100%, providing a better relief than Woodlands Relief.
