Lecture 9

Question 1

Inheritance tax:

What is annual exemption?
What if someone gives a gift and they live for 7 years or what if they die within 7 years
What if gift are given to trust what do you do?
What if the donor pays tax what is gross value?
What if business property relief? Like when do you get 50% and when do you get 100% relief

Answer 1

3. Annual exemption = 3,000 you can carry it forward for 1 year - this is for lifetime gifts only
4. If someone lives for 7 years after - its tax free but if they die within those years it taxed 40% then depending how many years you do further tax
   within 0-3 years =0% just do normal 40%
   3-4 =20%
   4-5 =40%
   5-6 =60%
   6-7= 80%
5. Trust = taxed immediately so 325,000 nil rate band then 20% on excess
6. Net gift x 100,000 x 100/80 =125,000. 125,000 -100,000 =25,000 ( tax)
7. You must own the business for 2 years and you get 100% relief if you own the business however 50% relief if you do own it and your renting it out.