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Flashcards in IHT and CGT Deck (44)
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1

Does the Red Book contain guidance on IHT

Yes, it is included in VPGA15 of the Red Book UK National Supplement

2

What is the primary IHT Legislation

Inheritance tax act 1984

3

What section is the definition of MV included in

Section 160

4

Definition of MV

Price of property if sold on the open market at the date of death excluding an impact of the whole estate being put on the market

5

What is prudent lotting

Selling the estate in lots that would maximise the proceeds of sale

6

What is a joint tenancy

Tenants own joint equal rights in the whole property. Upon death the deceased's interest passes onto the survivors in what is known as survivorship

7

What is a tenancy in common

An undivided share where 2 or more people with distinct different shares. When disposing of a share the other trustees must be consulted. Tenancy in common now known as a trust of sale and a trust of land

8

Name key case law

Duke of Buccleuch v IRC
(Prudent lotting)
Ellesmere v IRC
(best value)
White and Moss v IRC
(undivided share)
Clay v IRC
(Special purchaser)

9

What is the taxable threshold

£325,000

10

What percentage of the estate is taxed

40%

11

Name exemptions to IHT

Estates under £325,000
Gifts over 7 years
Gifts to charities
Transfer to spouse

12

What is the primary Capital Tax Legislation

Taxation of Chargeable Gains 1992

13

Where is the definition of market value contained for capital tax

Section 272 of the TCG 1992

14

What is Capital Gains Tax

Tax on the gain made from the disposal of an asset

15

What are the tax rates for capital gains tax

18-28% for residential property
10-20% for non-residential property

16

What is the taxable threshold for capital gains

Gains of over £12,300

17

How is capital tax calculated

Gain made on an asset which has been adjusted for indexation

18

What is rebasing

In capital taxation it is assumed any asset held at 31 March 1982 has been sold and immediately reacquired at its market value on that date. The effect is that any gain are attributed to that period since then

19

Where is the definition of agricultural value contained for IHT

S115(3) of the Inheritance Tax Act 1984

20

What is the definition of agricultural value for inheritance tax

The agricultural value of any agricultural property shall be taken to be the value which would be the value of the property if the property were subject to a perpetual covenant prohibiting its use otherwise than as agricultural property

21

What were the 3 main findings of the Antrobus case

1) The restriction is unrelated to occupation or use of any particular agricultural land and is related to the occupier’s employment in agriculture “in the locality”.

2) the planning condition includes as acceptable occupiers those “last working” in agriculture and their widows and widowers

3) an OAC can be removed by the grant of planning permission.

22

What is a permitted area

An area falling under private residence relief for capital gains tax purposes. This area is under 0.5 hectares with anything over having to be of appurtenance to the reasonable enjoyment of the property and within the same curtilage.

23

What is a undivided share

A share in a property where there is no defined portion

24

What type of land does permitted area apply to

Applies to garden and grounds

25

How many estates are taxed per year for IHT

only around 3%

26

For IHT what occurs if there is a mortgage on the property

Only charged for the amount owned

27

How would you adjust for a tenancy in common?

10% additional to an arithmetical share. 15% for any property where a trustee has the right to occupy

28

What is hope value?

The potential value which could be achieved in the future. For example the impact that planning permission can have if granted for a site

29

What is a gift?

Anything which involves money, property and possessions

30

What was the principle outlined in IRC V Crossman

A property must be valued under IHTA84/S160 as if it remained subject to the charge in the hands of the purchaser. In other words, the value of the property must reflect the charge which was encountered in the hands of the purchaser.