IHT (lifetime) Flashcards
(28 cards)
All lifetime transfers of value made by a person into a trust will give rise to a LCT if made
on or after 22 March 2006
IHT is payable on the chargeable value of the LCT at the lifetime rate of
20%
If the transferor dies within 7 years, the LCT will be reassessed to tax at
the death rate of 40%, using the NRB at the date of death
Current NRB
£325,000
If the transferor dies 3-7 years after making the transfer, it is also necessary to apply
taper relief at the relevant rate to reduce the IHT payable
For an LCT, who is liable to pay the IHT due?
the trustees of the trust which receives the assets
If the recipient of the lifetime transfer does not pay the IHT due within the deadline for payment (12 months from the end of the month of death), who becomes liable?
the deceased’s PRs
Annual Exemption (‘AE’) allows individuals to make
gifts of up to £3,000 each tax year free from IHT
Small gifts allowance
Small gifts (of up to £250 per recipient) can be made free from tax.
A transferor can make multiple gifts of up to £250 to as many different people as they like.
When is the small gifts allowance not available?
small gifts allowance is not available if combined with any other exemption, including the AE
Tax avoidance
the efficient and lawful arrangement of a client’s affairs in a manner which minimises their liability to tax
Aggressive tax avoidance
a form of tax avoidance which often involves the taxpayer entering into complex or artificial arrangements which have the overall effect of reducing their tax liability.
tax evasion
unlawful - a taxpayer withholds information about assets or income, or otherwise takes steps to avoid paying the tax they are liable for
objective of IHT planning is to
reduce the overall IHT liability on a person’s estate
A solicitor can take instructions for a will from who?
their client only
CCS 3.3: You maintain your competence to carry out your role and…
keep your professional knowledge and skills up to date
CCS 3.4: You consider and take account of your client’s
attributes, needs and circumstances
A solicitor has a duty to ensure their client does have
capacity and also to retain evidence to support this should the will be challenged at a later date
golden rule for testamentary capacity
If testamentary capacity is in doubt, the testator’s consent should be obtained to approach their medical practitioner for confirmation of capacity and to make a record of the findings
Hawes v Burgess rule on capacity
where an experienced solicitor had made a contemporaneous attendance note recording his view that a testator had capacity, it would require strong evidence for the court to find otherwise
general common law duty under White v Jones
a general common law duty to prepare a will for a client with due skill and care, and within a reasonable time
All clients should be given what advice regarding IPDFA 1975
clients should be advised that it is not possible to prevent a future claim being made against their estate under IPFDA 1975 or guarantee that any such claim will fail
Once a testator has made their will, it is important to ensure it is
reviewed at regular intervals
Marriage exemption when made by a parent of one of the parties
£5,000
