Tax planning Flashcards
(23 cards)
What exemptions are only available for lifetime transfers?
- annual exemption
- family maintenance exemption
- small gift exemption
- marriage exemption
- normal expenditure out of income
What exemptions are available on lifetime and death?
- spousal
- charity
- APR
- BPR
What is the annual exemption limit?
£3,000
What is family maintenance?
Relief applied to transfers for the purpose of education, training or maintaining dependent family members
Is there an upper limit for family maintenance relief?
No upper limit
Can be used for things like education costs and nursing home fees
What is the small gift limit?
£250 per recipient
How many small gifts can be made to different recipients each year?
Unlimited - can make as many as they want so long as the recipients are different
Can the small gift exemption be used alongside annual exemption?
No - anything over £250 will then be classed in the annual exemption limit
What is the marriage exemption?
£5000, £2500 or £1000 can be given tax free as a wedding gift - and can be used alongside annual exemption
What is the upper limit for normal expenditure out of income relief?
There isnt one
What is the spousal exemption?
All transfers between spouses and CPs are fully exempt - no upper limit where D is domiciled in the UK
What is the charity exemption?
All transfers to charity are fully exempt
Is there an upper limit on a charity exemption?
No upper limit
What is APR and BPR?
Transfers of qualifying business/agricultural assets are exempt up to either 100% or 50% provided T has owned the assets for the minimum qualifying period
What assets are NOT subject to IHT?
-discretionary pension lump sum payments
-life insurance policies written in trust
If a testator leaves more than 10% of their net estate to charity, what is the chargeable estate taxed at?
36% rather than 40%
What is the basic principle of specific gifts to exempt beneficiaries?
Gifts made to exempt beneficiaries are made free of IHT
What is a discretionary trust?
A trust for the benefit of a group of beneficiaries, none of whom have a fixed right to trust assets - the trustees have complete discretion over distribution
What is a life interest trust?
A trust for the benefit of a life tenant and the remainder man - the trustees do not have complete discretion over distribution
What are the GROB rules?
Rules that prevent individuals manipulating PETs by giving away property but retaining an interest in it
What is POAC?
This is an income tax charge which complements GROB by preventing individuals using assets which they have given away or contributed towards
What is GAAR?
Extremely wide measure that penalises aggressive tax avoidance
What is DOTAs?
This is the reporting regime that helps HRMC identify and monitor potential tax avoidance at an early stage
