D Reliefs

Question 1

Lifetime tax (Stage 1) tax is paid by?

Answer 1

Transferor (unless the transferee has elected to pay the tax)

Question 2

Lifetime tax (Stage 1) tax is borne by?

Answer 2

Transferor (unless the transferee has elected to pay the tax)

Question 3

Additional IHT on lifetime transfers arising on death (Stage 2) tax is paid by?

Answer 3

Transferee

Question 4

Additional IHT on lifetime transfers arising on death (Stage 2) tax is borne by?

Answer 4

Transferee

Question 5

IHT on death estate (Stage 3) tax is paid by?

Answer 5

Personal representatives

Question 6

IHT on death estate (Stage 3) tax is borne by?

Answer 6

Beneficiary of the residue of the estate

Question 7

IHT planning (exemptions)

Answer 7

Making the maximum use of available exemptions

Question 8

IHT planning (gifts)

Answer 8

Making gifts as early as possible

Question 9

Why make gifts as early as possible (survival)?

Answer 9

Increase likelihood of surviving for seven years that PETs don’t become chargeable and CLTs if exceeding NRB only incur lifetime tax of 20%

Question 10

Why make gifts as early as possible (value)?

Answer 10

This will also fix the value of transfers at an earlier stage

Question 11

IHT planning (gifts into trusts)?

Answer 11

Can be made up to the nil rate band without any immediate charge arising

Question 12

Disadvantages of lifetime giving (asset)

Answer 12

Donor loses the right to use the asset

Question 13

Disadvantages of lifetime giving (capital gains tax)

Answer 13

A transfer shortly before death is unlikely to achieve an IHT saving, but may well result in an unnecessary capital gains tax liability

Question 14

Death estate tax planning (rearrange loans)

Answer 14

It may be possible to rearrange loans or mortgages away from qualifying property in order to maximise relief

Question 15

Death estate tax planning (direct descendants)

Answer 15

There can be a benefit in arranging or rearranging a will to maximise the available tax-free inheritance (homes left to direct descendants)

Question 16

When will IHT only be charged once in terms of generation?

Answer 16

IHT will only be charged once when the grandchildren inherit the assets on the death of the grandparent.

It would be charged twice if first inherited by grandparent’s children

Question 17

How are tuition fees to a son treated?

Answer 17

Payment could be exempt without any cash limit unde rnormal expenditure out of income exemption

Question 18

If a spouse remarries what can happen with the unused nil rate band when she dies?

Answer 18

Can be transferred to the spouse that survives her

Question 19

PET for 22 February 2019 when death is 1 March 2024?

Answer 19

60%. As 5 to 6 years

Question 20

When is there no inheritance tax benefit in making a lifetime gift (in terms of property)?

Answer 20

As property is not expected to increase in value in the near future

Question 21

When is it beneficial to skip a generation?

Answer 21

Gifts are made to grandchildren rather than children

Question 22

Why is making gifts to grandchildren rather than children seen as more beneficial?

Answer 22

Gifts will only be taxed once, rather than twice

Question 23

Is changing the terms of her will so that the residue of her estate goes to her grandchildren rather than her children effective for reduce IHT on estate?

Answer 23

Not effective

Question 24

Is making lifetime gifts to trusts up to the value of the nil rate band every seven years effective for reduce IHT on estate?

Answer 24

Effective

Question 25

Changing the terms of her will so that the residue of her estate goes to her husband rather than her children effective for reduce IHT on estate?

Answer 25

Effective

Question 26

Making lifetime gifts to her grandchildren early in life effective for reduce IHT on estate?

Answer 26

Effective

Question 27

When is lifetime tax deducted in stage 2 of the IHT computation?

Answer 27

On CLTs, never PETs