Inheritance tax Flashcards
1
Q
transfer of value
A
- when there’s a disposition which results in a reduction in the value of the transferor’s estate
2
Q
Depositions that aren’t deemed as transfer of value
A
- no gratuitous intent
- transfer allowable expenditure for income or corp tax
- made for maintenance of family
- caused by death on active service
3
Q
chargeable property
A
all property to which a person is beneficially entitled
4
Q
all property is chargeable EXCEPT…
A
- those outside the uk or owned by non-doms
- certain gov securities held by non uk residents
- certain heritage properties
- a reversionary invest in a trust
5
Q
Chargeable person
A
- individual who is dom in the uk is liable for all uk and overseas properties
- non uk dom is chargeable for uk properties
- married couples are assessed separately
6
Q
transfers which are wholly expect from IHT
A
- transfers to spouses/ civil partners
- gifts to charities
- gifts made for national purposes
- gifts of pre-eminent property to nation
- transfers made to maintain heritage property
- small gifts less than £250 per tax year
7
Q
Gifts on marriage are exempt from IHT up to:
A
- £5000 from parent
- £2,500 from remote ancestor
- £2,500 from one party to another
- £1,000 otherwise
8
Q
Annual Exemption
A
- First £3,000 of lifetime transfer made in any tax year is exempt.
- unused part can be carried into the next tax year
9
Q
Potentially Exempt Transfers (PET)
A
- The rules state that the individual has to survive for 7 years after making the gift for it to be exempt.
- charged to IHT if transferor dies within 7 years
10
Q
Taper relief - tax charges
A
- 3 yrs or less … 0% tax
- 3 ≤ x < 4 yrs …. 20% tax
- 4 ≤ x < 5 yrs …. 40% tax
- 5 ≤ x < 6 yrs …. 60% tax
- 6 ≤ x < 7 yrs …. 80% tax
11
Q
Quick succession relief
A
- available if part of the estate was transferred within 5 yrs of death and was charged to IHT at that time
12
Q
Transfer of unused nil rate band
A
- if one spouse has some unused portion it can be transferred to surviving spouse
13
Q
Resident nil rate band
A
- available for estates which include property
- RNRB is the lower value of the property and the default allowance.
- RNRB is reduced if value of estate exceeds £2 mil
14
Q
Valuation
A
value of transfer is equal to the open market value
15
Q
Admin and payment of IHT
A
- must deliver accounts of capital taxes within 12 months
- must pay within 6 months from the end of the month in which the transfer was made
16
Q
Business Property Relief (BPR) and Agricultural property relief (APR)
A
- value of property for IHT purposes may be reduced by 50% or 100% for tax
- must have owned business property/ used for agricultural purposes for 2 years prior to transfer
- rate of relief depends on category