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11 Cards in this Set
- Front
- Back
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Business property relief |
1. Makes worldwide businesses tax free for IHT No BPR on investments 2. Must own for 2 years Can combine ownership periods for spouses Donee must still own asset at donor's death 3a. 100% Any shares in unquoted trading company Any sole trader or partnership business assets 3b. 50% 51% holding in quoted company Asset owned by individual and used by a partnership where individual is a partner or company controlled by individuals |
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Business property relief (special rules) |
1. Replacement rule: Claim BPR on replacement asset if combined ownership period is at least 2 out of last 5 years 2. Successive transfer rule: Claim BPR on second transfer if asset eligible for BPR when acquired and transfer tax due to death 3. Restrict BPR for investments called expected assets (total assets - expected assets/total assets) |
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Agricultural property relief (APR) |
1. APR makes farm land and buildings tax free for IHT (100%) 2. Claim APR on agricultural value not full MV 3. Only available on UK and EEA farms 4a. Owner occupied farms - owned for 2 years 4b. Let out to tenants - owned for 7 years 5. If gift eligible for APR, gain can be postponed under gift relief |
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Fall in value relief |
1. The value of a gift is usually frozen at MV of the gift 2. On death if the value of the asset has fallen, get dall in value relief 3. Donee must still own asset at donor's death or have sold it at arm's length |
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Gift with reservation (GWR) |
1. A donor may make a gift but reserve the benefit of using the asset 2. The donor will be treated as still owning the asset at the date of death 3. To avoid DT, HMRC tax the higher of lifetime tax and tax based on death estate |
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Residence NRB |
1. RNRB of £175k available if decreased main residence left to a direct descendant on death 2. Available for deaths after 6 Apr 2017 3. Restrict by 50% (net estate - £2m) if estate before BPR and APR is more than £2m |
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Preservation of unused NRB |
1. Any unused NRB or RNRB is lost and is carried forward for the surviving spouse 2. The unused NRB is carried forward as a % not an amount 3. If second death after April 2017 claim 200% RNRB |
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Reduced rate of IHT for charitable gifts |
1. If 10% of baseline amount is left to a charity then remaining death estate is taxed at only 36% 2. Baseline amount is the taxable estate after NRB but after adding back the RNRB and charitable legacy 3. Consider changing will using deed of variation to increase charitable gift to benefit from reduced rate |
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Quick succession relief |
1. Deducted after DTR on death estate if sameasset taxed twice within 5 years 2. Computed using formula Original tax * original asset/original death estate * QSR% 3. Period between deaths. % Up to 1 year - 100% 1-2 - 80% 2-3 - 60% 3-4 - 40% 4-5 -20% |
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Deed of variation |
1. Possible to change will after death 2a. Within 2 years of death 2b. In writing and signed by all parties 2c. No valuable consideration 2d. Statement that deed is valid for IHT and CGT 3. Usually used to leave wealth to surviving spouse as an exempt transfer who can then make tax free PETs to children 4. Deed of disclaimer results in legacy going back into death estate and being distributed based on original will |
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Trusts |
1. Settlor (donor) puts assets into a trust managed by trustees for the benefit of beneficiaries. CGT postponed under gift relief 2a. Discretionary trust 3. Beneficiaries have no legal right to assets/income 4. Trustees deduct income tax at 45% at source 2b. Interest in possession trust 3. Life tenant entitled to trust income during life which retains original identity 4. On death of life tenant remainderman gets trust capital assets 5. Trusts protect family assets from multiple tax charges, mismanagement by future generations, bankruptcy and divorce |
