WAE Tax

Question 1

IHT Nil Rate Band

Answer 1

0 - 325000

Question 2

Outside IHT Scope (2)

Answer 2

1. Non Gratuitous Benefit
2. Expenditure for Family Maintenance

Question 3

Related Property Rule

Answer 3

Asset of value higher taking into account spouse’s property

Question 4

Lifetime Transfers

Answer 4

1. Exempt
2. Potentially Exempt Transfers
3. Immediately Chargeable

Question 5

Exempt Transfers

Answer 5

1. Gifts to Spouse (Recipient not domiciled in the UK is limited to 325000)
2. Gifts to Charities
3. Gifts made on death via will or deed of variation
4. Lifetime Gifts

Question 6

Exempt Lifetime Gifts (3)

Answer 6

1. Small Gift upto 250 quid
2. Gifts on Marriage (5000-1000)
3. Normal Expenditure out of Income

Question 7

Annual Exemption Amount (2)

Answer 7

1. 3000
2. Carry over unused for one tax year (use second in following tax year)

Question 8

Chargeable Lifetime Transfers (2)

Answer 8

1. Gifts to Trusts (Discretionary or Interest in Possession)
2. Gifts of Asset or Cash to Company

Question 9

CLT Tax Rates

Answer 9

1. Exceeds Nil Rate Band (325,000)
2. Trustees Pay At 20%
3. Donor Pays At 25%

Question 10

Procedure for Calculating Lifetime Tax (5)

Answer 10

1. Value Transferred
2. Deduct Annual Exemptions (This year and previous)
3. Identify Nil Rate Band
4. Deduct Chargeable Transfers made in 7 years prior from NRB
5. Tax at 20 or 25%

Question 11

Death Tax on PETs (2)

Answer 11

1. Value of PET
2. Chargeable Lifetime Transfers made 7 years prior to PET

Question 12

Taper Relief (5)

Answer 12

1. 0-3 years = 0%
2. 3-4 years = 20%
3. 4-5 years = 40%
4. 5-6 years = 60%
5. 6-7 years = 80%

Question 13

Death Tax on CLTs (3)

Answer 13

1. CLTs within 7 years on death attracts additional IHT
2. Includes PETs that become chargeable
3. No refund given if payment exceeds

Question 14

Business Property Relief (6)

Answer 14

1. Before annual exemptions
2. 100% or 50%
3. Assets as investments accepted
4. Business must be a trading entity
5. Transferor must hold for atleast 2 years prior to transfer
6. Replacing asset within 3 year period

Question 15

Agricultural Property Relief (5)

Answer 15

1. 100% before annual exemptions
2. Must be in the UK
3. Owner-Occupier (2 years)
4. Non-Owner Occupier (7 years)
5. APR takes priority over BPR

Question 16

Calculating Death Tax

Answer 16

1. Net Value = Assets - Debts & Liabilities
2. Plus Tax paid
3. Deduct PETs and CLTs that become chargeable
4. Exceeding NRB charged at 40%

Question 17

Lower rate of 36% IHT if

Answer 17

1. Giving 10% or more baseline amount to charity
2. Baseline amount = Value after deducting reliefs and the available nil rate band
3. Exclude gift to charity

Question 18

Residence Nil Rate Band

Answer 18

1. Limited to value of home or statuory amount (175K)
2. Net estate greater than 2 million - 1 pound for every 2 pounds over

Question 19

Quick Succession Relief

Answer 19

1. Recipient dies with 5 years and donor’s estate paid tax
2. Decreases by 20% for each year between donor and recipient death

Question 20

Post Mortem Relief

Answer 20

1. PR sell some or all of assets for less that probative value
2. Quoted shares at a loss within 12 months of death
3. Land and Building sold within 3 years and loss

Question 21

Woodlands Relief

Answer 21

1. Entitled to land for 5 years prior
2. Excludes the value of the woodlands from the estate

Question 22

Tax Returns During Administration

Answer 22

1. Non-savings income and interest taxed at BR 20%
2. 8.75% for Dividends
3. PRs Annual Exempt Amount of 6000
4. CGT at 20% for General Gains
5. 28% Residential