Lifetime Tax Planning

Question 1

Is a gift reversible?

Answer 1

Only with the donee’s consent

Question 2

What are lifetime-only exemptions?

Answer 2

1) Annual exemption
2) Small gifts
3) Marriage exemption
4) Family maintenance exemption
5) Normal expenditure out of income

Question 3

What is the annual lifetime exemption?

Answer 3

£3,000 per annum

Question 4

What is the rule on unused annual allowance?

Answer 4

Can forward only unused previous year’s allowance

Question 5

When should annual exemption be used?

Answer 5

After other exemptions

Question 6

What is the small gift allowance?

Answer 6

£250 per person, unlimited recipients

Question 7

Can small gifts be used with Annual exemption for same recipient?

Answer 7

No

Question 8

What is the marriage exemption for gifts from parents?

Answer 8

£5,000

Question 9

What is marriage exemption for gifts from grandparents?

Answer 9

£2,500

Question 10

What is marriage exemption for anyone but parents / grandparents?

Answer 10

£1,000

Question 11

Can marriage exemption be combined with Annual Exemption?

Answer 11

Yes

Question 12

What is the family maintenance exemption?

Answer 12

Unlimited funding for education / dependants

Question 13

What is normal expenditure out of income?

Answer 13

Regular surplus income, not affecting lifestyle of donor

Question 14

What is the limit on normal expenditure out of income?

Answer 14

No financial limit, but must be documented

Question 15

What is excluded from the taxable estate?

Answer 15

1) Life insurance written in trust
2) Discretionary pension lump sum payments

Question 16

When is discretionary pension lump sum payments excluded?

Answer 16

If properly nominated

Question 17

How could you mitigate 7-year risk?

Answer 17

Use life cover written in trust