Inheritance Tax

Question 0

What are some items included in the IHT Proforma death estate calculation?(5)

Answer 0

Value of transfer, Less: A/E, NRB, rate @ 40%, available Taper Relief

Question 1

How is the value of shares calculated when they are gifted?(2)

Answer 1

The lower of 1/4 up and mid market price

Question 2

How would a gift (Property) with reservation be treated for the purposes of calculating IHT on death?(5)

Answer 2

Gift will be a PET at MV when gifted
If reservation lifted before death, IHT on MV when lifted
Reservation not lifted, added to death estate time of death
No IHT after 7 yrs of gift
Death within 7yrs, IHT on whichever with highest liability

Question 3

What are some advantage of making a lifetime gift?

Answer 3

The gift would be a potentially exempt transfer (PET)
The value of the PET is frozen from the time gifted
Exemptions available such as annual exception 3,000, gifts of marriage/civil partnerships, regular gifts from income, small gifts 250
Taper relief within 7yrs but over 3
Relief also available for a fall in value

Question 4

What are the conditions necessary for business property relief?

Answer 4

Two years ownership of qualifying asset by donor
Donee still owns shares at time of gift or if disposal occurred before death, must be replaces with qualifying property
If assets of company does not or only partly constitutes investment properties, shares and other investments

Question 5

What are some other tax issues one must consider at a letter date of a gift of shares?

Answer 5

Disposal will be at market price and would be restricted by investment ownership
Gift is not subject to stamp duty