Inheritance Tax (6)

Question 1

What is a potentially exempt transfer?

Answer 1

A lifetime gift made by an individual to another individual

Question 2

Original assumption with a PET?

Answer 2

Gift will be exempt IHT

Question 3

What is a CLT?

Answer 3

Transfer made in lifetime into a trust. There is an immediate charge to tax on that gift

Question 4

If donor dies within 7 years of making the gift in CLT?

Answer 4

CLT remains chargeable on death of the donor

Question 5

How is IHT payable?

Answer 5

At 40% of the value of the gift. Paid by the donee

Question 6

If taxpayer did survive for at least 3 years from date og gift in IHT?

Answer 6

Any IHT charge is reduced by the available taper relief

Question 7

If the donor survives more than 7 years from making the gift in CLT?

Answer 7

CLT becomes fully exempt

Question 8

WHat is the nil rate band?

Answer 8

Amount that can be gifted without incurring any IHT liability

Question 9

What is the nil rate band?

Answer 9

£325000

Question 10

WHat is the residence nil rate band?

Answer 10

£175000

Question 11

Excess death rate?

Answer 11

40%

Question 12

Excess lifetime rate?

Answer 12

20%

Question 13

If trustees pay tax on lifetime tax?

Answer 13

20%

Question 14

If donor pays the tax on lifetime tax?

Answer 14

25%

Question 15

When is death tax due on any any lifetime transfers?

Answer 15

Made within seven years of death

Question 16

What happens when death tax is implemented? (PET)

Answer 16

PETs become chargeable for the first time

Question 17

What happens when death tax is implemented? (CLT)

Answer 17

Additional tax may be due on CLTs

Question 18

If taxpayer does not survive for 7 years following the PET but does survive for at least 3 years?

Answer 18

Any IHT payable on the transfer is reduced by taper relief

Question 19

Relief from 3 - 4 years?

Answer 19

20%

Question 20

Relief from 4 - 5 years?

Answer 20

40%

Question 21

Relief from 5 - 6 years?

Answer 21

60%

Question 22

Relief from 6 - 7 years?

Answer 22

80%