Week 8 - Inheritance Tax

Question 1

What are the 3 types of lifetime gifts in inheritance tax?

Answer 1

Exempt transfers
Potential exempt transfers - PETs
Chargeable lifetime transfers - CLTs

Question 2

What are a few transfers from inheritance tax that are exempt?

Answer 2

• A gift of up to £250 per tax year
• Up to £5000 by a parent, £2500 by a grandparent or £1000 by anyone else
• £3000 gifted each year
• Anything to spouse

Question 3

What are PETs (Potential Exempt Transfers)?

Answer 3

• A gift made by someone to another
• A trust for the benefit of a disabled person/a bereaved minor

Question 4

What are CLTs (Chargeable Lifetime Transfers)?

Answer 4

Transfers or gifts into trusts

Question 5

What is the nil rate band for 24/25?

Answer 5

£325,000. Therefore no inheritance tax charged

Question 6

What is the lifetime tax rates of inheritance tax?

Answer 6

20% if the trustees pay the tax
25% if the donor pays the tax

Question 7

What is the additional NRB if a residential property is left to direct descendants on death?

Answer 7

£175,000

Question 9

What is the difference between PETs and CLTs for inheritance tax purposes?

Answer 9

PET is not chargeable to IHT unless the transferor dies within 7 years of making the transfer. But CLT is charges to IHT immediately and there may be a further charge if transferor dies within seven years.