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TC > Inheritance Tax: Death Estate And Valuation > Flashcards

Inheritance Tax: Death Estate And Valuation Flashcards

1
Q

IHT: Which shares are quoted?

A

“PLC”

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2
Q

IHT: Quoted shares valuation

A

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

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3
Q

IHT: Quoted shares valuation: Quarter up rule calculation

A

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

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4
Q

IHT: Quoted shares valuation: Marked bargain average

A

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

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5
Q

CGT: quoted shares valuation

A

HALF up rule

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6
Q

IHT: Related property definition

A
  1. Spouse
  2. Charity (In 5y)
  3. Political party (In 5y)
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7
Q

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

A

Yes

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8
Q

IHT: Related property valuation calculation

A

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

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9
Q

IHT: Related property valuation rule

A

HIGHER of RP calculation and valuation under normal rules

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10
Q

Do related property rules apply to CGT?

A

No

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11
Q

IHT: Shareholding valuation calculation

A

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

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12
Q

IHT: Unit trusts valuation

A

Bid price
(Lowest price)

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13
Q

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

A

Proceeds of policy
(Not market value)

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14
Q

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

A

Not taxed

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15
Q

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

A

Market value of policy

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16
Q

IHT: What does the death estate consist of?

A

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)

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17
Q

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

A

No

(Unless legally enforceable)
(Assume not)

18
Q

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

A

Deduct primarily from property on which it is charged

19
Q

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

A

Spouse

20
Q

IHT: Transfer of unused NRB: Calculated how?

A

Proportion, not amount

21
Q

IHT: RNRB

A

Residence nil rate band

22
Q

IHT: RNRB: Applicability

A

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

Left to direct descendants

23
Q

Other thing to remember about RNRB?

A

It is tapered

24
Q

IHT: RNRB: Tapering threshold

A

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

25
Q

IHT: Can unused RNRB be transferred?

A

Yes

26
Q

IHT: RNRB: Transferal elegibility: Actions

A

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

27
Q

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

A

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

28
Q

IHT: RNRB: Transferal: Calculation

A

Proportion

29
Q

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

A

100% unused
(Because didn’t exist then)

30
Q

ITH: Other thing to remember about transferring RNRB?

A

Tapering

31
Q

ITH: RNRB: Transfer: Tapering rule

A

Same as normal RBRB tapering

32
Q

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

A

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

33
Q

IHT: QSR

A

Quick succession relief

34
Q

IHT: QSR: Conditions

A
  1. Property acquired by the deceased 5y before death
  2. IHT charge on initial transfer
35
Q

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

A

Yes

36
Q

ITH: QSR calculation

A

Tax
x
(Net/Gross)
x
Relevant %

37
Q

IHT: QSR for specific legacy: Value of legacy

A

Increase in transferee’s estate

38
Q

IHT: QSR for specific legacy: Value of diminution

A

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

39
Q

IHT: QSR formula

A

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 %

40
Q

IHT: Treatment of charitable legacies

A

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)

TC (8 decks)

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