More IHT Flashcards
When does the tax year run?
6 April - 5 April
When does BPR apply?
ss. 103 - 114 IHTA
Applies to the value of qualifying business assets.
Not available if the business consists wholly or mainly for making or holding investments.
Timing requirements - The transferor must have owned the business assets for at least 2 years immediately prior to the transfer.
Rate of relief - 100% for business or interest in a business (e.g. business of a sole proprietor or a partner’s interest in a business) or shares in a unquoted company.
or 50%.
Who has liability for payment of IHT to HMRC?
Generally the PRs of the deceased. So whoever is responsible for administering the estate.
Who or which property bears the burden of IHT on death?
Where the burden falls is known as the incidence of tax.
It concerns apportioning tax to different parts of the estate.
Property vesting in the PRs - Tax will be attributed to the value of the estate passing through the PRs; they will pay it as a testementary expense.
Property passing by survivorship - where there is a jointly owned house it is actually going to be the surviving JT who is going to be responsible for the IHT on the deceased’s share. This could cause difficulties as they might not want to sell the house to pay the tax so in that situation an installment option might be helpful.
Trust property - apportion it: PRs will pay the bit relevant to the personal estate and trustees of the trust fund will pay the tax in relation to the trust fund. So the trust fund bears the burden.
When is IHT payable?
Six months after the end of the month in which the deceased died.
If the IHT remains unpaid after that time, interest is payable.
In certain cases IHT may be paid by 10 equal annual instalments.
