Inheritance Tax

Question 1

To what does the nil rate band in the year apply?

Answer 1

To chargeable transfers within 7 years of that year/gift

Question 2

What 4 lifetime tax exemptions are given?

Answer 2

1) marriage (£5000 parent, £2500 lineal ancestor, £1000 other)
2) small gifts (

Question 3

What is the AE and how is it used?

Answer 3

£3000

Current year and then can use previous year £3000 if unused

Question 4

Upon death, for IHT for death tax, which transfers only are taken into account?

Answer 4

Transfers in the 7 years prior to death

Question 5

To whom is a PET paid?

Answer 5

Individuals

Question 6

When is a PET exempt/payable?

Answer 6

Exempt unless donor dies within 7 years of making PET

Question 7

To whom is a CLT paid?

Answer 7

Trusts

Question 8

When are CLTs chargeable?

Answer 8

During lifetime and within 7 years of death of donor

Question 9

Who pays IHT on CLTs and at what rates?

Answer 9

Donor = 25%, and if so, value needs GROSSING UP!

Donee = 20%

Question 10

Proforma for IHT?

Answer 10

Value/cost (old) X
- cy AE
- cf AE
= net gift

• nrb (= 325000 - transfers last 7 years)
  = IHT taxable

Question 11

Lifetime tax rate?

Answer 11

20%

Question 12

Death tax rate?

Answer 12

40%

Question 13

Order of tax/relief?

Answer 13

Transfer 
- nrb available (net of transfers last 7 years!)
TAX AT DEATH RATE 40%
- taper relief
- lifetime tax paid (on CLTs only)
= tax due!

Question 14

What is taper relief given on?

Answer 14

Transfers within 3-7 years of death

Question 15

What happens to unused nrb upon death?

Answer 15

Remaining is transferred to spouse

Question 16

What 1 exemption exists for IHT?

Answer 16

Transfer between spouses

Question 17

Death estate proforma?

Answer 17

Property 
- (mortgage + interest)
\+ ALL ASSETS
- debts due
- funeral expenses
- exempt transfers 
= chargeable!!
- nrb 
= taxable!!

Question 18

When is death tax due?

Answer 18

Lifetime gifts: +6 months from end of month of death

Death estate: EARLIER OF +6 months from end of month of death, or, delivery of account

Question 19

When is CLT payment due?

Answer 19

6 Apr - 30 Sept: following 30 Apr

Otherwise: +6 months from end of month of transfer