Inheritance Tax (2) Flashcards
What is a potentially exempt transfer (PET)?
A lifetime transfer (other than an exempt transfer) made by an individual to another individual
What is a chargeable lifetime transfer (CLT)?
Any other lifetime transfer by an individual which is not an exempt transfer
Example of PET
A gift between individuals
How is PET exempt?
It is exempt from inheritance tax when gift is made. But may become chargeable to detath tax if donor dies within 7 years of aming the gift
How are CLTs chargeable
During lifetime-to-lifetime tax
How many additional tax become payable?
If donor dies within seven years of making CLT
How is death tax calculated?
At 40% and is payable by donee of the gift
When is IHT charged on PETs and CLTs?
Where donor dies within seven years of making the gift
What does an individual’s death estate consist of?
All property they owned immediately before death less debts and funeral expenses
Are pension funds included in the death estate/
No, so investing in a pension fund is a good way to reduce inheritance tax liabiltiy
How are pension funds withdrawals treated in the death estate?
Included in the death estate
What does a death estate consist of?
Land and buildings
Shares and other investments
Cars
Cash
if a CLT is made between 6 April and 30 September/
The tax is due by 30 April following thge end of tax year, otherwise tax is due six months from end of month of transfer
What is the donor primarily liable for?
Tax due on chargeable lifetime transfers. But donee may agree to pay tax out of trust assets
Where is the death tax on lifetime gilts due?
Six months from end of the month of death, by the donee
