A more recent version of these Tax notes – written by Cambridge And Oxilp And College Of Law students – is available here.
The following is a more accessble plain text extract of the PDF sample above, taken from our Private Client Notes. Due to the challenges of extracting text from PDFs, it will have odd formatting:
Elective: Private Client
1. Inheritance Tax [IHT] Checklist
IHT payable when the gift was made:
1. Does the gift carry with it any liability [e.g. mortgage / charge on shares]
? spouse 100%
? charity 100%
? political party 100%
? Business property relief
? small gifts
? normal expenditure
5. 6. PET
Annual exemptions [check dates]
Equals = Value of the PET / LCT Gross up any LCT if donor is paying tax. TAX: No IHT payable The PET is ignored while Peggy is alive The value of the PET does not affect the Cumulative Total
NRB in the YEAR of the gift Tax at 20% if it exceeds the NRB
LCT 2NRB Option 1: "The LCT1 made more than 7 years before LCT 2. The PET is ignored therefore the whole NRB is available [check NRB table of that year]"NRB option 2: "The LCT1 was made in the last 7 years before LCT2 therefore it effects the NRB available. The NRB is now [NRB of this year - cumulative total]"?
NB. No taper relief at this stage Valuation issues? [10% discount]
IHT payable on LCTs / PETs at date of death:
1. Transferable NRB?
2. "x dies on DATE. The 7 year period runs from DATE"
3. NRB transferable- transfer the appropriate % proportion not used
4. Work chronologically:
? First PET / LCT within the 7 year period - go back 7 years. Any LCT in that period will effect the cumulative total. "This LCT is not reassessed but may be relevant to calculating the cumulative total for subsequent gifts. Cumulative total = PSx"
? PETs: "this PET was made within 7 years of death and must be assessed for tax. The cumulative total = PSx + PSy WHO pays?
? LCTs: "It was made within 7 years of death so should be re-assessed at full rate applicable to death.
Buy the full version of these notes or essay plans and more in our Private Client Notes.