Inheritance Tax Flashcards
What is the nil rate band ?
£325k
What is the charity exemption ?
Transfers of value are exempt to extent that the values transferred are attributable to property which is given to charities
What is the business property relief ?
100% reduction for partnership share for unquoted company shares.
50% reduction for quoted shares if they have controlling interest (50%) and owned for 2 years.
What is the agricultural relief ?
100% reduction if transferor had right to vacant possession immediately before the transfer
What is a potentially exempt transfer (PET) ?
Any gift made by an individual to another individual or into a disabled trust
What are the exemptions available for PET ?
- Spouse or charity
- business or agricultural
- annual exemption (£3000 each year)
- small gifts (less then £250)
- marriage gifts
What is a lifetime chargeable transfer (LCT) ?
Any lifetime transfer which does not fall within the definition of PET - these are charged at 20% during lifetime and then reassessed for 40% after death
When are PETs wholly exempt from tax ?
If they are made more then 7 years before the death
What are the tapered relief exemptions ?
Transfer within:
- 3/4 years - 80% of death charge
- 4/5 years - 60% of death charge
- 6/7 years - 20% of death charge
When is IHT due ?
Within 6 months from end of death month
What is the residence nil rate band and how does it apply ?
Must own a qualifying residential interest which is closely inherited - £175k at 0% tax in addition to the existing nil rate band of £325k
What happens to the annual exemption if never used (only one lifetime gift) ?
It is doubled to £6k
How can the nil rate band be increased ?
If your spouse died without using some or all of their nil rate band this unused portion can be added to your own upon death
