Inheritance Tax

Question 1

What does chargeable transfer mean?

Answer 1

Transfer of value which is made by an individual but is not an exempt transfer

Question 1

When can IHT be charged?

Answer 1

1. On death (their estate)
2. Lifetime gifts made to individuals 7 years before death
   Lifetime gifts to a company or into a trust

Question 2

When is the spouse or cp exemption available for IHT?

Answer 2

When property included in the estate is passed to the surviving spouse

Question 3

What is the charity exemption for IHT?

Answer 3

Any property of the estate that passes to charity

Question 4

What is the business property relief for IHT?

Answer 4

Operates to reduce the value transferred by a transfer of value of relevant business property by a certain percentage - only applies where the business is trading

1. 100% reduction for a business or interest in a business and the company shares are not listed on the stock exchange
2. 50% reductions where the company shares are listed on the stock exchange IF the transferor has voting control of the company immediately before the transfer
   - And land buildings, machinery, plant owned by the transferor personally but used for business purposes

Question 5

What are the time limits to benefit from reliefs?

Answer 5

The asset in question must have been owned by the transferor for at least 2 years at the time of the transfer

or

must be a replacement for relevant business property where the combined period of ownership is 2 hears

Question 6

What is agricultural property relief?

Answer 6

Reduces the agricultural value of agricultural property by a certain percentage

Question 7

What is the rate of tax if the deceased made no chargeable transfers 7 before before his death?

Answer 7

0% on the first £325,000

Question 8

What is the rate of tax if the estate exceeds the NBR (£325,000)?

Answer 8

40%

Question 9

What is required if the deceased did make any chargeable transfer in the 7 years before death?

Answer 9

The cumulation principle must be used

Question 10

What is the residence nil rate band?

Answer 10

For deaths occurring after 6th April 2017 RNRB (£175,000) is available in addition to the NRB

The deceased must die owning a ‘qualifying residential interest’ which is ‘closely inherited’

Applies only up to the value of the deceased’s residence

Question 11

How is the adjusted RNRB calculated for estates valued at £2 million or more?

Answer 11

£175,000 - (value of estate - £2 million) / 2