Inheritance Tax (4) Flashcards
What should donors ensure in tax planning?
Use is amde of exemptions in relation to lifetime gifts
When considering how to pass on assets in the death estate?
Spouse/civil partner exemption may be used to ensure that no inheritance tax is payable when first spouse/civil partner dies
When can an election be made when using exemption?
Ensure unused nil rate band of first spouse/civil partner is available to be used against estate of survinig spouse/civil partner
The earlier a gift is amde in lifetime/
More likely that the donor will survive for seven years after making it, thereby avoiding death tax on the transfer
If donor survive at least three years?
Taper relief will apply to reduce the death tax
What is good tax planning for gifts early in life?
Give away assets which are likely to increase in value such as land and shares
Do the values of lifetime transfer increase?
No
Where is there a tax-free uplift?
in the value on death for capital gains tax
What are gifts to trust?
Chargeable transfers
If the gift is within the nil rate vand/
There will be no inheritance tax payable when gift is made
How are transfers only cumulated?
For seven years and after seven years, further gift within nil rate band can be made to a trust
When can residence nil rate band only be used?
If main residence is passed to direct descendants, not to ther family members
What may donors consider?
Giving assets to their children
What if the donor’s alerady have sufficient assets for their financial needs?
May be beneficial to skip a generation so gifts are made to grandchildren
Why skip a generation in inheritance tax planning?
Avoids a further charge to inheritance tax on death of the chdilren. Gifts only taxed once instead of twice
