Inheritance Tax
- Created by: zara.khan10
- Created on: 04-01-16 14:31
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- Inheritance Tax
- 3 occasions IHT is charged:
- 2) On lifetime gifts made to an individual - 7yrs prior to death
- Certain gifts are charged IF the donor dies within 7yrs of making them
- When the transfer is made - no IHT is charged
- Considered potentially exempt
- Becomes exempt if you survive 7yrs
- Considered potentially exempt
- When the transfer is made - no IHT is charged
- Certain gifts are charged IF the donor dies within 7yrs of making them
- 1) On death
- When an individual dies - IHT is charged on the value of the estate
- ASSETS less LIABILITIES
- Subject to various exemptions and reliefs
- ASSETS less LIABILITIES
- When an individual dies - IHT is charged on the value of the estate
- 3) On lifetime gifts to a company or into a trust
- IHT may be avoided by use of trust i.e. for a disabled person
- At present - its immediately chargeable
- IHT may be avoided by use of trust i.e. for a disabled person
- 2) On lifetime gifts made to an individual - 7yrs prior to death
- IHT charged at 'the value transferred by a charegeable transfer' s1,s2
- STEP 1: IDENTIFY THE TRANSFER
- Lifetime = any disposition which reduces the value of the transferor's estate
- Death - tax charged as if deceased made transfer of value on estate
- STEP 2: FIND VALUE TRANSFER
- Death = value of estate
- Lifetime = reduction on transferors' estate
- STEP 3: APPLY RELEVANT EXEMPTION/RELIEFS
- Example: Spousal Transfers or Annual Exemption
- These reduce IHT
- Example: Spousal Transfers or Annual Exemption
- STEP 4: CALCULATE TAX AT APPROP. RATE
- NRB: £325K
- Tax applies to excess of this
- Sometimes not all the NRB is available
- Look back 7 yrs prior
- NRB: £325K
- STEP 1: IDENTIFY THE TRANSFER
- 3 occasions IHT is charged:
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