Inheritance tax

Question 1

When must inheritance tax be paid?

Answer 1

End of month of death, plus 6 months (interest if not on time)

Question 2

When must IHT submission be filed?

Answer 2

IHT form must be submitted on 31st January after the end of the tax year

Question 3

What is business property relief?

Answer 3

When an inheritance includes a business:
100% of the company is limited
50% if quoted and controlled
0% of uncontrolled, quoted company shares

Question 4

Is money held in an ISA chargable for IHT?

Answer 4

Yes

Question 5

What is a post-death variation?

Answer 5

A dies, gives to B. B dies, gives to C.

C can now get relief on the amount of IHT that B has already paid (determined by a fancy equation).

Question 6

What is the equation for quick succession relief?

Answer 6

A * B * C, whereby:
A = Tax on A’s death
B = ((A’s estate-total tax)/A’s estate value)
C = relevant percentage (supp. materials)

Question 7

For IHT, how much can you give to your wife if:

a) she is domiciled in Falkirk
b) she is domiciled in Nicaragua

Answer 7

Uk domicile = you can give her as much as you want: no tax on gift to wife
Foreign domicile = limited to £325k (NRB)

Question 8

For IHT, when can a dead person use their RNRB

Answer 8

When they donate their home to their ‘direct dependents’ (i.e. the semen trail).
Can only be used on gift of home.
Per supplementary materials: £150k (19.20); £175k (20/21).
Note: for every £2 that the estate’s total value exceeds £2m, the RNBR will be reduced by £1 (personal allowance methodology).

Question 9

For what reasons would business property relief (IHT) not be allowed?

Answer 9

a) the company had been held for less than 2 years
b) if the company’s principal business activities is shares/property investment
c) if, at the time of death, the company had been agreed to be sold

Question 10

When is 100% Agriculture Property Relief available?

Answer 10

When:
a) the deceased farmed the land themselves
b) the land can be empty in 24 months
c) deceased obtained the property on or after September 1995.
All other cases are 50%

Question 11

For IHT, what is a deed of variation?

And what conditions need to be met in order for this to apply?

Answer 11

Where you make a change to a will (e.g. grandpa gives to son; son doesn’t want because he is loaded; so it is passed on the grandson).
Conditions:
- must be in writing
- must be signed by foregoer within 2 years of death
- must not be money (needs to be a thing)