Inheritance Tax (5) Flashcards
When does inheritance tax arise?
An individual must make a transfer of value
What is the loss to the donor principle known as?
Dimunition
What does dimunition include?
Lifetime transfers
Wealth a person leaves when they die
The amount of tax that may be payable on that gift/transfer of value is based on?
Cumulative amount of transfers made by the donor over a 7-year period
What is chargeable property?
All property to which the donor is beneficially entitled
An inidividual who is UK domiciled (chargeable)
Chargeable on worldwide asset
An inidividual who is not UK domiciled (chargeable)
Chargeable on UK assets only
Three types of lifetime transfers?
Exempt transfers
Potentially exempt transfers
Chargeable lifetime transfers
In an exempt transfer (inheritance tax)?
There is no IHT at any point
At the time a potentially exempt transfer is made?
No IHT is chargeable
If donor lives seven years in a potentially exempt transfer?
Gift becomes exempt and no IHT is charged
If donor dies within the next seven years in a potentially exempt transfer?
The PET becomes chargeable
How is inheritance tax chargeable on chargeable lifetime transfers?
At the time the gift is made AND at time of death if donor dies within seven years
What is an annual exemption?
The first £3000 of gift each tax year is exempt
Marriage exemption (each parent)
Each parent of the bride or groom £5000
