Tax Flashcards
IHT Steps
1) Identify transfer of value (10%/15%)
2) Apply Exemptions and Reliefs
3) Calculate Tax at Appropriate Rate (RNRB first then NRB consider previous spouse/civil partner, then remainder 40%/36% if after reliefs and exemptions and NRB at least 10% passing to charity)
IHT Reliefs and Exemptions
1) Spouse/Civil Partner
2) Charity
3) Business Relief
4) Agricultural Relief
Business Relief (IHT)
1) Reduction 100%
Business or interest in business
Unlisted company shares
2) Reduction 50%
Owned for two years or replacement total two years
Listed with voting control
Land, buildings, machinery owned personally but used for business proposes if voting control
PET and LCT steps
1) Identify transfer value (PET excludes maintenance of child or dependent relative )
2) Apply relevant exemptions/reliefs
4) Calculate Tax at appropriate rate when it is due (apply tapering relief: 20% life, 40% death)
LCTS and PETS Reliefs and Exemptions
1) Annual (3000, carry over to 6000)
2) Small Gifts (250 or less NOT FOR LCTs)
3) Normal expenditure (100%)
4) In Consideration of marriage
5,000: parent or party
2,500: remoter ancestor
1,000: any other case
Tapering Relief
3-4: 80%
4-5: 60%
5-6: 40%
6-7: 20%
7 and over: 0%
Calculate tax on specific item
Total Tax Bill divided by Total estate x100
Then multiply the percentage received by value of specific item
Income Tax Deceased’s Liability
Starting on April 6 before death and ending on death
PR’s liability for income tax
Do not pay at higher rate but no allowances
Once own tax position settled remaining income paid to beneficiaries who get credit
CGT on death
Probate value
20%/28% flat rate
Can claim annual exemption 6,000 and following 2 years if lasts that long
Losses can be set against gains but not transferred to beneficiaries
