Inheritance Tax Exemptions Flashcards
What % exemption do spouses get on IHT (Death Estate)
100% Unlimited
What is the cap to spousal exemption? (Death Estate)
If the spouse is non-domiciled - 100% up to 325,000
List the exemptions to IHT and the exemption amount. (8 items)
1) Spouses - 100%
2) Charity - 100%
3) Political Parties - 100%
4) Normal gift out of income - 100%
5) Small gifts - £250 per donee per year
6) Marriage exemption - Depending on relationship
7) Annual exemption - £3k per year (CY & PU)
8) BPR
Normal gift out of income exemption 3 rules?
1) Doesn’t change your standard of living.
2) Regular
3) Payment from income that year
What is relevant property for BPR & corresponding %’s ? ( things)
1) Sole trade business - 100%
2) A trading partnership interest - 100%
3) Shares in a trading company - 50% if quoted, 100% if unquoted
4) Personally owned asset used by a company = 50%
What are the conditions for BPR to be applicable?
1) Ownership for at least 2 years
2) Sale contract cannot be present
3) Excepted assets (investments)
Excepted assets formula
BPR % * Share value * (MVco - Inv / MVCO) = BPR
What is the scenario where RNRB is applicable
Main home being left to a direct descendant in the death estate
What is the relief given on RNRB
Lower of £175,000 or value of home less mortgage
When does the RNRB begin to be lost?
When estate is above £2m
When is all the RNRB lost?
When estate is above £2.35m
When is QSR relevant?
When an asset/estate is taxed twice in a period of five years e.g. by multiple deaths.
QSR Formula?
Tax paid on earlier death * (Value of estate - Tax paid on earlier death) / Value of estate * Relevant Hardmans percentage
How to value shares for IHT
Lower of 1/4 up & average marked bargains
