Inheritance tax Flashcards
Spouse + charity exemptions effect
Any property passing to spouse or charity is fully exempt
Business property relief (BPR)
100% reduction if it’s “relevant business property”:
- business/interest in business,
- unquoted shares
50% reduction if it’s other business property:
- quoted shares where deceased had voting control of the company at death,
- land/machinery owned by the deceased, but used by the business of which he had voting control
BPR only applies if:
- the business is trading,
- deceased/spouse owned the assets for at least 2 years
Agricultural property relief only applies if property was:
- occupied by deceased for purpose of agriculture for 2 years before transfer, or
- owned by deceased for 7 years before transfer, and occupied by someone else for purpose of agriculture
Rate of IHT
40%
Nil rate band
325,000 (unless also using spouse’s)
Residential nil rate band
175,000 (unless also using spouse’s)
ALSO: reduced by 1 for every 2 over 2m
Residential nil rate band available if:
- deceased died owning a “qualifying residential interest” (in dwelling house in which deceased resided at any point),
- property was “closely inherited” (must pass to lineal descendants, spouse’s lineal descendants, or widow’s lineal descendants)
Size of annual exemption
3,000 every year (up to 6,000 if did not use last year’s)
Size of gifts in consideration of marriage exemption
5,000 if party’s parent,
2,500 if party’s more remote ancestor,
1,000 if anyone else
When are PETs chargeable?
If deceased dies within 7 years of making them
What is a lifetime chargeable transfer (LCT)?
Any lifetime transfer that isn’t a PET
- transfer into trust, transfer to company
Charge on LCT during lifetime
20%
Tapering relief
Applies to PETs and LCTs:
- 20% of death charge payable if transfer 6-7 years before death
…
- 80% of death charge payable if transfer 3-4 years before death
Charge on LCT after death
40% (subtract what’s already been paid!)
