Wills IHT

Question 1

What is the lifetime rate of IHT?

Answer 1

20% (payments into trust)

Question 2

What is the Death rate of IHT?

Answer 2

40%

Question 3

What is the value of a transfer of value for a lifetime transfer?

Answer 3

Loss in value to the donor

Question 4

What is the value of a transfer of value for the death estate?

Answer 4

Market Value

Question 5

How much is the Nil rate band?

Answer 5

£325,000

Question 6

How much is the Residence Nil Rate Band?

Answer 6

£175,000 - applies after 06.04.2017

Question 7

What happens if a donor subject to a lifetime chargeable transfer dies within 7 years?

Answer 7

The LCT will be reassessed to tax at the death rate of 40%

Question 8

What is the ‘Cumulative total’?

Answer 8

The total chargeable value of all chargeable transfers made in the previous 7 years. The cumulative total is taken off the NRB when calculating IHT on death.

Question 9

What is the process for calculating IHT on lifetime estate?

Answer 9

a) Calculate the cumulative total
b) Identify value transferred
c) Apply exemptions and reliefs
d) Apply basic NRB and calculate tax

e) Apply taper relief
f) Give credit for tax paid in lifetime.