WE 3 Bit on IHT Flashcards

1
Q

What is the lifetime rate of IHT?

A

20% (payments into trust)

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2
Q

What is the Death rate of IHT?

A

40%

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3
Q

What is the value of a transfer of value for a lifetime transfer?

A

Loss in value to the donor

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4
Q

What is the value of a transfer of value for the death estate?

A

Market Value

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5
Q

How much is the Nil rate band?

A

£325,000

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6
Q

How much is the Residence Nil Rate Band?

A

£175,000 - applies after 06.04.2017

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7
Q

What happens if a donor subject to a lifetime chargeable transfer dies within 7 years?

A

The LCT will be reassessed to tax at the death rate of 40%

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8
Q

What is the ‘Cumulative total’?

A

The total chargeable value of all chargeable transfers made in the previous 7 years. The cumulative total is taken off the NRB when calculating IHT on death.

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9
Q

What is the process for calculating IHT on lifetime estate?

A

a) Calculate the cumulative total
b) Identify value transferred
c) Apply exemptions and reliefs
d) Apply basic NRB and calculate tax

… after death:
e) Apply taper relief
f) Give credit for tax paid in lifetime.

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