Use LEFT and RIGHT arrow keys to navigate between flashcards;
Use UP and DOWN arrow keys to flip the card;
H to show hint;
A reads text to speech;
7 Cards in this Set
- Front
- Back
|
What 3 types of transfers are there for IHT? |
- exempt (e.g. to spouse / charity / qualifying political party) - CLT - charged lifetime tax (and death tax if die within 7 years) - PET - charged death tax if die within 7 years |
|
|
What is the basis of IHT assessment? |
- must be transfer of value (measure donees diminution in value) - of chargeable property (eveything unless exempt) - by a chargeable person ( UK dom charged on worldwide assets, UK non-dom charged on UK assets)* *NB - deemed domiciled if UK res for 17/20 years. |
|
|
What reliefs are available for Inheritance Tax? |
- Quick succession relief - if same assets inherited twice within 5 years - Business property relief - (either 100% relief or 50% relief - look up - includes shares and business assets) - Agricultural property relief - farms and agricultural land, generally 100%m same conditions as BPR NB order of reliefs applied = APR > BPR > others (inc annual exemption, taper relief etc) |
|
|
Explain Business property relief |
applies to: - transfer of relevant TRADING business property - if held for qualifying ownership period (usually >=2 years before transfer) - no contract for sale in place - proportionally applied if business includes some excepted assets (which get no BPR) - e.g. large cash balances / investments are excepted from BPR |
|
|
Explain gifts with reservation of benefit and how they are treated. |
- if an asset is gifted but the donor retains use of the asset e.g. gives away a house but continues to live in it rent free. - 2 charges may arise (one on lifetime transfer, one on death / cessation of benefit) - IHT due is the HIGHER of the 2. - No 36% tax rate even if 10% left to charity for property under gifts with reservation rules. |
|
|
What planning can be done by the recipient of inheritance following death? |
- variations of will - can be made if assets are inherited in quick succession as better than QSR. - variations made by beneficiary, within 2 years of death. |
|
|
What main differences between CGT and IHT should be considered for tax planning (details in notes)? |
- timing of payments (if early ends up out of IHT charge) - valuations - MV vs diminution in value - diff reliefs apply - diff exemptions - spouse planning / exemptions |
