IHT Reliefs

Question 1

Taper Relief

Answer 1

Transferor survives >3 years after transfer. Reduced IHT on death.
3-4yrs 80%
4-5yrs 60%
5-6yrs 40%
6-7yrs 20%

Question 2

QSR

Answer 2

Previous IHT charge in last 5 yrs- reduced IHT on death.

Entire Estate-IHT paid on first transfer x ((gross transfer-IHT paid)/gross transfer) x QSR%

Single asset when tax paid not given- Tax rate suffered by estate x Asset value x QSR%
>1 yr 100%
1-2 yrs 80%

Question 3

BPR

Answer 3

-Owned asset for 2 yrs prior to transfer
-Can have replaced another BPR asset
-Can have passed from spouse on death

100%
-Unicorp trading business
-Unquoted shares in trading co
-Furnished holiday accom
-AIM shares

50%
-Quoted shares trading co
-Trading assets in trading business

Question 4

Gift with Reservation of Benefit

Answer 4

-Transferor continues to benefit from asset transferred to transferee I.E
-house with continued occupation
-shares with continued receipt of dividends

-No GWROB if transferor pays market rate to use asset
-Life transfer when gift is made and part of death estate
-If transferor ceases benefitting- treat as PET

DOES NOT APPLY
-Notional income less than 5k
-Spouse exemption and AE exemption still available
-If not transfer >7 yrs before transferor used asset

Question 5

Variations to will

Answer 5

-Beneficiary can vary terms of will within 2 yrs of death I.E
Parent inherits but wants to transfer to child
Can reduce a second IHT charge as wont be a transfer from parent to child

-Can eliminate CGT if parent wants to transfer to child in life