Inheritance Tax: Basic Principles

Question 1

Inheritance tax definition

Answer 1

Transfer of value

Of chargeable property

By chargeable person

Question 2

Inheritance Tax: Transfer of value

Answer 2

Reduction in donor’s estate
(Diminution of value)
(Selling at market value is not)

Question 3

Inheritance tax chargeability: UK domiciled

Answer 3

Worldwide assets

Question 4

Inheritance tax chargeability: Not UK domiciled

Answer 4

UK assets only

Question 5

2 types of Inheritance Tax transfers

Answer 5

1. PET
2. CLT

Question 6

Inheritance Tax: PET

Answer 6

Potentially exempt transfer

Question 7

Inheritance Tax: CLT

Answer 7

Chargeable lifetime transfer

Question 8

Inheritance Tax: BPT

Answer 8

Business property relief

Question 9

Inheritance Tax: Annual exemption roll-forward rule

Answer 9

Can roll forward max 1y

Question 10

Inheritance Tax: 3 lifetime exemptions

Answer 10

1. Small gifts exemption
2. Marriage/Civil partnership exemption
3. Normal expenditure out of income

Question 11

Inheritance Tax: 3 general exemptions

Answer 11

1. To spouse
2. To charity
3. To qualifying political parties

Question 12

Inheritance Tax: General exemption: Qualifying political party

Answer 12

2 MPs

or

1 MP and 150,000 votes

Question 13

Inheritance Tax: When is an IHT chergeable?

Answer 13

BOTH:
1. When gift made
2. On death (if applicable)

Question 14

Inheritance Tax: CLT applicability

Answer 14

Trusts

Question 15

Inheritance Tax: NRB

Answer 15

Nil rate band

Question 16

Inheritance Tax: NRB applicability (timeframe)

Answer 16

Any 7y period

Question 17

Inheritance Tax: NRB: Amounts & Dates

Answer 17

08/09: £312,000

Since then: £325,000

Question 18

Inheritance Tax: Lifetime tax rates:

Answer 18

1. Trustees: 20%
2. Donor: 25%

Question 19

Inheritance Tax: GCT name

Answer 19

: Gross chargeable transfer

Question 20

Inheritance Tax: GCT classification (2 options)

Answer 20

1. Trustees paid tax: Just chargeable amount
2. Donor pays tax: CA plus tax

Question 21

IHT: 2 things taxed at death

Answer 21

1. Lifetime transfers within 7y
2. Death estate

Question 22

IHT: Death tax NRB

Answer 22

The NRB relevant to the tax year of death

Question 23

Is NRB the same for stages 1 & 2 of IHT calculation?

Answer 23

Yes

Question 24

IHT: FIV relief conditions

Answer 24

MV at sale/death is lower than transfer date

(Does not apply to NRB)

Question 25

IHT: FIV relief doesn’t apply to:

Answer 25

1. > 50y chattels
2. Plant & Machinery