IHT Flashcards
(23 cards)
Lifetime tax rate if transferor pays?
What if trustees pay?
If trustees pay the tax, what is the GCT?
Transferor: 20/80
Trustees: 20%
GCT: transfer value before NRB and tax
When is lifetime tax of CLT deducted at death?
Right at the end
Exempt transfers under IHT?
- Transfers to spouse
- Gifts to charities
- Gifts to political parties
- Gifts under £250
- Marriage gifts (£5k from parent, £2.5k from grandparent, £1k anyone else)
What transfers do annual allowance apply to?
PETs and CLTs
Not Death Estate!
How are the value of quoted shares calculated in death estate?
Lower of:
Low quoted price + 1/4 of difference between low and high prices
Average of low and high marked prices
What to do if life assurance is not written in the trust?
What if it was?
Include proceeds in death estate
If it was, proceeds are exempt
When does QSR apply and how is it calculated?
What if the person only received part of the estate?
Someone dies after receiving inheritance within past 5 years.
Tax paid on 1st transfer x (net transfer/gross transfer) x relief %
Tax paid on 1st transfer and gross transfer are still the entire amount of death estate.
When does fall in value relief occur and how is relief applied?
When MV of CLT/PET at death is less than at transfer.
The fall in value is deducted before calculating IHT @ 40%
When does RNRB (residential nil rate band) apply and how is it calculated and applied?
When house is left to direct descendants (children/grandchildren).
Relief is lower of:
- £175,000
- Value of property (relief decreases if estate over £2m)
Deducted before calculating IHT @ 40%
When does BPR (Business Property Relief) apply? Where to find relief?
When shares are held in a company for more than 2 years.
In Hardman’s.
How to calculate value of BPR using asset values? (What are expected assets?)
What is this figure?
Share value x (Net assets - Expected assets) / Net assets
(Expected assets = large cash balances and investment amounts)
The chargeable value, NOT the relief
Limit on spouse exemption for non-UK domiciled individuals?
£325,000
When are assets not taxable under IHT?
If the assets are overseas and the individual is non-UK domiciled
Who is ‘deemed’ UK domiciled?
- UK resident for past 15/20 years
- Born in the UK and lived in UK for 1 out of 2 previous tax years
- 3 years after ceasing to be UK domiciled
(first 2 in Hardman’s)
When shares are gifted, what is the value of the transfer?
The decrease in value of the transferor’s shares
(value before - value after)
Who pays IHT at death on gifts to trusts?
Trustees
What if an individual leaves >10% of net chargeable estate to charity?
IHT is charged at 36%
What donation to charity qualifies for reduced 36% IHT?
> 10% of net chargeable estate
What transfers are lifetime tax calculated on?
Just CLTs
When calculating the NRB remaining on lifetime tax, what transfers do you take into consideration?
Just CLTs!
Ignore PETs until death tax!
If a GCT value is given, what type of transfer is it?
How is that factored in when working out NRB remaining for LT tax?
CLT
Deduct GCT value for NRB remaining
Does BPR apply on investment companies?
No
How does the transfer or NRB and RNRB between spouses work?
If spouse dies, NRB/RNRB is increased by % of band not used at death.
