Inheritance tax Flashcards
As a general rule, how are IHT transfers value d?
By how much of a ‘loss to the estate’ they are
True or false? The Small Gifts exemption can be used in conjunction with other exemptions?
False
Other than those listed on the tax tables, what IHT exemptions are available?
-Gifts for education/maintenance
-Gifts to charities/political parties
-Gifts for the national benefit
-Payments ‘out of normal expenditure’
What factors should be considered when making a PET of business assets?
-Do the assets produce income needed by the owner?
-Would any transferred business assets qualify for reliefs?
-Availability of CGT holdover relief
-Should donor maximise pension contributions instead?
What are three benefits and one drawback of NRB discretionary trusts?
-Ensure tax advantages where beneficiaries have not yet been chosen
-Tax-efficient to transfer assets most likely to appreciate in value.
-Chargeable gains of assets being placed into trust may be eligible for holdover relief - may mean CLT better than PET.
-Trust will need to monitor appreciating assets to avoid/reduce periodic & exit charges.
What is the minimum annual cash value of a benefit before pre-owned assets tax may be levied?
£5,000
What types of people are eligible for full IHT exemption on death?
-Members of armed services
-Members of emergency services
-Humanitarian workers
Any of the above who die due to injuries incurred in the line of duty
How is the amount of transferable NRB calculated on 2nd death?
Based on % of NRB used at time of 1st death
When does the transferable NRB need to be claimed by?
-Within 2 years of death
OR
-Within 3 months of beginning to act as personal executors (if this is later)
What conditions must be met to qualify for the RNRB?
-Died after 6/4/17
-Homeowner
-Leaves home to direct descendants
True or false? RNRB can be transferred even if the 1st death occurred before 6/4/17.
True
If a ‘qualifying residential interest’ is placed into a discretionary will trust, will it qualify for RNRB?
No
If a ‘qualifying residential interest’ is placed into a discretionary will trust but then appointed out to direct descendants within 2 years, will it qualify for RNRB?
Potentially
If a ‘qualifying residential interest’ is placed into a bare trust/immediate post death interest trust with direct descendants as the beneficiaries, will it qualify for RNRB?
Yes
Assuming there is a mortgage on the property, how much of the value can be claimed for RNRB?
Net equity value
i.e. value less any outstanding mortgage
