WE 4 & 5 - Tax Flashcards
What are the PRs duties to HMRC?
- Deliver an account to HMRC regarding the deceased’s estate.
- Pay any IHT due
What is included in the account delivered to HMRC?
- all property and the value of each item at the date of death.
- the exemptions and reliefs that apply.
What’s the deadline for the submitting the account to HMRC?
12 months from the end of the month in which the death occurred
What is the deadline for paying IHT due?
6 months from the end of the month in which the death occurred, after which interest becomes payable on the unpaid tax.
What are the rules regarding instalment payments?
Tax can be paid in 10 instalments, the first due on the normal payment date and the remainder on each anniversary date. Interest is charged.
What assets can the instalment option be used for?
- land and buildings,
- Comapny shares/securities giving the deceased control.
- Some unquoted shares without control but where payment would cause undue hardship.
- business or interest in a business
- Timber
- farms / interest in farming business.
what happens if an asset which is the subject of an instalment plan is sold?
The tax becomes due immediately.
Which form is used to account to HMRC about an estates assets / liabilities?
IHT 400
What are the two types of excepted estates?
- Low value
- Exempt
What is a ‘Low Value’ estate?
- No IHT payable because the gross value of the estate is below NRB
gross value =
- taxable estate
+
- specified transfers (chargeable transfers made in the last 7 years)
+
- specified exempt transfers (gifts to spouse/charity
(NRB includes any transferred NRB but does not include RNRB).
What is an ‘Exempt excepted estate’?
- Gross value is no more than £3m but no IHT is payable because after debts, spouse/charity exemption the net value of the estate is below the NRB.
(note: ONLY spouse/charity exemption count).
(NRB includes any transferred NRB but does not include RNRB).
What factors prevent an estate from being ‘low value’ or ‘exempt’ excepted estates?
- trusts: more than one trust, or a single trust worth more than £250k
- Foreign assets worth more than £100k
- specified transfers exceeds £250k
- gift with reservation
- RNRB claim.
When is form C4 used?
- additional assets liabilities are discovered.
- corrections to values.
changes to exemptions / reliefs - a variation of the original beneficiary entitlements which affect the IHT liability.
Is there a legal duty for the PRs to follow the funeral wishes set out in a will? Who will pay?
No. Payment is made from the post-death administration expenses payable from estate funds.
When should a formal valuation be sought?
For items valued over £500
