Inheritance tax: Death estate and valuation Flashcards
How are shares listed on the stock exchange valued for inheritance tax purposes?
Lower of:
- lower quoted price + 1/4 x (higher quoted price - lower quoted price)
- average of the highest and lowest marked bargains on the day of transfer
How are shares listed on the stock exchange valued for capital gains tax purposes?
lower quoted price + 1/2 x (higher quoted price - lower quoted price)
1 advantage of giving an appreciating asset away during lifetime
The increase in value up to the date of death will not be subject to inheritance tax.
What taxes are gifts on death subject to?
Inheritance tax only.
How long must a donor survive in order to qualify for taper relief?
3 years.
Why are endowment mortgages not deducted from the property value for inheritance tax purposes?
The endowment element of the policy should cover the repayment of the mortgages.
How to calculate death estate
All assets
Less liabilities
Less funeral expenses
What sort of transfer is marriage exemption available to?
Available against lifetime gifts only.
What sort of transfer is small gifts exemption available to?
Available against lifetime gifts only.
What sort of transfer is inter-spouse exemption available to?
Available against lifetime gifts and death estate.
What sort of transfer is normal expenditure out of income available to?
Available against lifetime gifts only.
How to value unit trusts for inheritance tax purposes?
At the lowest quoted price, which is the bid price.
What is a partially exempt trader?
A taxable person making both taxable and exempt supplies
What are the 3 implications of being a partially exempt trader?
- The input VAT recoverable depends on the supply to which the input VAT relates.
- Input VAT attributable to exempt supplies made by a partially exempt trader is not fully recoverable unless it falls below de minimis limits.
- Input VAT relating to taxable supplies can always be recovered in full, even if the trader does not fall below the de minimis limits.
