IHT silly mistakes Flashcards
IHT:
Donor pays
Lifetime tax @25%
GCT = chargeable amount + lifetime tax
IHT
Trustees pay
Lifetime tax @20%
GCT = chargeable amount
Quoted shares
LOWER of:
Lower price + 1/4 (higher - lower price)
Average of highest and lowest marked bargains
Related property rules
HIGHER OF
Value of property / shares ALONE
Value of property / shares with spouse
Calculate:
Pre-transfer value - input higher value of the 2
Less post transfer value - higher of 2 values
DIM in value: Difference = Transfer of value
Charity legacy
Death tax = 36% (ONLY on death estate)
Gift must be greater than 10% of net chargeable estate (NCE = Taxable estate + charity legacy + RNRB)
QSR
Deduct from death tax
QSR = IHT paid on first death * (Increase in receivers estate / Reduction in givers estate) * relevant %
Death estate
Deduct mortgage costs, outstanding tax payable, loans payable (Apart from gambling debts)
Spouses
If spouse died recently
- Check for unused NRB / RNRB - can pass over to spouse
Fall in value relief
Deduct the reduction in value
Stage 3:
Goes ABOVE death tax calcul (i.e with NRB deductions)
Life assurance policy - OWN life
Include PROCEEDS in death estate
Life assurance policy - Held in trust
DON’T include in death estate
Small lifetime gifts exemption
£250
Overseas property
Admin expenses limited to max 5%
NRB available for death
Deduct any CLT’s + Chargeable PETs in 7 years prior to death
Normal expenditure out of income exemption
Regular payments
Out of income
Leaving sufficient income to maintain usual lifestyle
