Inheritance Tax: Death Estate And Valuation

Question 1

IHT: Which shares are quoted?

Answer 1

“PLC”

Question 2

IHT: Quoted shares valuation

Answer 2

LOWER of:
1. Quarter up rule
2. Marked bargain average

Question 3

IHT: Quoted shares valuation: Quarter up rule calculation

Answer 3

Lower quoted price
+
1/4 (Higher quoted price - lower quoted price)

Question 4

IHT: Quoted shares valuation: Marked bargain average

Answer 4

Average of highest and lowest marked bargains on the day of transfer

Question 5

CGT: quoted shares valuation

Answer 5

HALF up rule

Question 6

IHT: Related property definition

Answer 6

1. Spouse
2. Charity (In 5y)
3. Political party (In 5y)

Question 7

IHT: Is property transferred to a charity or political party by the persons spouse related property?

Answer 7

Yes

Question 8

IHT: Related property valuation calculation

Answer 8

Value of whole property
x
(Transferor’s value
/
Related property value)

Question 9

IHT: Related property valuation rule

Answer 9

HIGHER of RP calculation and valuation under normal rules

Question 10

Do related property rules apply to CGT?

Answer 10

No

Question 11

IHT: Shareholding valuation calculation

Answer 11

Value of whole shareholding
x
(Transferor’s no. shares
/
Total related shareholding)
^ no. of shares too I think

Question 12

IHT: Unit trusts valuation

Answer 12

Bid price
(Lowest price)

Question 13

IHT: Life assurance policies: Valuation: Related to individuals own life: Not held in trust

Answer 13

Proceeds of policy
(Not market value)

Question 14

IHT: Life assurance policies: Valuation: Related to individuals own life: Held in trust

Answer 14

Not taxed

Question 15

IHT: Life assurance policies: Valuation: Related to someone else’s life

Answer 15

Market value of policy

Question 16

IHT: What does the death estate consist of?

Answer 16

All assets owned at death

Less:
Funeral expenses

Deduct:
1. Prior-death debts
(e.g. outstanding credit card bills)
2. Taxes
(e.g. IT & CGT)

Question 17

IHT: Death estate: Debts: Can gambling debts be deducted?

Answer 17

No

(Unless legally enforceable)
(Assume not)

Question 18

IHT: Death estate: Debts: Treatment when debt charged on a specific property (e.g. mortgage)

Answer 18

Deduct primarily from property on which it is charged

Question 19

IHT: Transfer of unused NRB: Can be transferred to?

Answer 19

Spouse

Question 20

IHT: Transfer of unused NRB: Calculated how?

Answer 20

Proportion, not amount

Question 21

IHT: RNRB

Answer 21

Residence nil rate band

Question 22

IHT: RNRB: Applicability

Answer 22

Net value of property
(MV less liabilities secured on it)
(e.g. motgage)

Left to direct descendants

Question 23

Other thing to remember about RNRB?

Answer 23

It is tapered

Question 24

IHT: RNRB: Tapering threshold

Answer 24

£2m
After deductions
(Liabilities, debts)
Before reliefs
(Spouse exemptions, BPR etc.)

Question 25

IHT: Can unused RNRB be transferred?

Answer 25

Yes

Question 26

IHT: RNRB: Transferal elegibility: Actions

Answer 26

Spouse Leaves home to direct descendants And includes the home in the estate

Question 27

IHT: RNRB: Transferal elegibility: Does the spouse have to have lived in the house?

Answer 27

Yes At some stage (But not necessarily the one lived in with spouse)

Question 28

IHT: RNRB: Transferal: Calculation

Answer 28

**Proportion**

Question 29

IHT: RNRB: Transferal: First of couple died before 6 Apr 2017?

Answer 29

100% unused (Because didn't exist then)

Question 30

ITH: Other thing to remember about transferring RNRB?

Answer 30

Tapering

Question 31

ITH: RNRB: Transfer: Tapering rule

Answer 31

Same as normal RBRB tapering

Question 32

IHT: RNRB: Do you need to work out at each point first (even if not a trust)?

Answer 32

I think so, for everything Same for steps 2&3 I think

Question 33

IHT: QSR

Answer 33

Quick succession relief

Question 34

IHT: QSR: Conditions

Answer 34

1. Property acquired by the deceased *5y* before death 2. IHT charge on initial transfer

Question 35

IHT: Does QSR apply when the asset is no longer held by deceased at the date of death?

Answer 35

Yes

Question 36

ITH: QSR calculation

Answer 36

Tax x (Net/Gross) x Relevant %

Question 37

IHT: QSR for specific legacy: Value of legacy

Answer 37

Increase in transferee's estate

Question 38

IHT: QSR for specific legacy: Value of diminution

Answer 38

Value of legacy Plus IHT on legacy from residue of first estate

Question 39

IHT: QSR formula

Answer 39

Net first transfer x (tax paid on first estate / gross first estate) x relevant percentage **OR** (if not given amount of tax on specific legacy) specific legacy x estate rate x relevant %

Question 40

IHT: Treatment of charitable legacies

Answer 40

Reduces IHT rate Net chargeable estate becomes the taxable estate without deducting the: 1. Charitable legacy 2. RNRB (In exam often easier to work out the net chargeable estate as 1. Value of taxable death estate 2. Then add back a. value of charitable legacy and b. RNRB)