ICAEW Business Planning Taxation 2024 - BPT Open
Book Notes 2024 (Achieved 89%) - ACA Professional
Level
In inheritance tax, how is an asset treated that is sold undervalue? - Treated as a
gift
Inheritance tax - what are some deposits that don't count as transfers of value? -
1. without gratuitous intent
2. Maintenance of the transferors family.
3. Allowable expenditure for the purposes of income.
What are the exceptions available to a transfer from IHT - 1. Transfers to
spouse/civil partner
2. Gifts to UK Charities.
3. Qualifying Political Parties
If your personal exemption isnt fully utilised, how much can be used in 2 years? -
£6,000
When can transfers during lifetime be exempt? - 7 year rule`
Can the annual exemption be carried forward? - No, it can only be carried forward
1 tax year.
Small gifts exemption - donor can gift 250 to any one person in any one tax year
If A GIFT totals more than 250, becomes totally chargeable
, ICAEW Business Planning Taxation 2024 - BPT Open
Book Notes 2024 (Achieved 89%) - ACA Professional
Level
Would £250 gifted to 10 nephews, daughters and sons become chargeable to
IHT? - No.
As long as the amount doesnt exceed £250.
Marriage Exemption - Exempt Amounts:
£5000 parents
£2500 grandparents
£1000 anyone else
IHT - Normal Expenditure out of Income - 3 Criteria
1. Paid out of income.
2. Regular
3. Donor maintains standard of living.
These gifts/transfers are exempt.
Two categories of lifetime transfers - 1. Chargeable lifetime transfers
2. Potentially Exempt transfers
Difference between a CLTs and PETs - CLT - Chargeable Lifetime Transfer
1. Gift to a trust/company
, ICAEW Business Planning Taxation 2024 - BPT Open
Book Notes 2024 (Achieved 89%) - ACA Professional
Level
2. Immediately chargeable
3. 20% tax rate
PET - Potentially Exempt Transfer
1. Gift to another individual.
2. Taper relief applies if transferred under 7 years
3. Annual exemption applies.
NRB - £325,000
Steps to determine IHT payable. - 1. Identify transfers in the 7 years before death.
2. Apply any Exemptions.
3. Use the NRB and apply against estate.
4. Apply Taper relief
5. Excess is taxed at 40%
6. Deduct any IHT already paid (CLTs)
If the donor transfers £10,000 into a trust but dies within 7 years of the transfers,
how much tax is paid and what is the affect? - 40% tax rate if the donor dies
within 7 years.
Brought back into the estate.
, ICAEW Business Planning Taxation 2024 - BPT Open
Book Notes 2024 (Achieved 89%) - ACA Professional
Level
How does the amount of tax paid vary depending on who has paid the tax into a
trust? - Donor - 25%
Trustees/donee - 20%
Life Tax - Applies only to CLTs.
Tax charged at the time.
Rate is 20%.
Gross chargeable transfer -
20/80 rule IHT - Applies where the donor bears the the lifetime tax.
Net grossed up.
If the trust paid there would be no gross up.
If the donor pays the Lifetime tax has does this affect the Nil Rate Band? - More
Nil Rate Band will be used.
Gifts will be grossed up.
Book Notes 2024 (Achieved 89%) - ACA Professional
Level
In inheritance tax, how is an asset treated that is sold undervalue? - Treated as a
gift
Inheritance tax - what are some deposits that don't count as transfers of value? -
1. without gratuitous intent
2. Maintenance of the transferors family.
3. Allowable expenditure for the purposes of income.
What are the exceptions available to a transfer from IHT - 1. Transfers to
spouse/civil partner
2. Gifts to UK Charities.
3. Qualifying Political Parties
If your personal exemption isnt fully utilised, how much can be used in 2 years? -
£6,000
When can transfers during lifetime be exempt? - 7 year rule`
Can the annual exemption be carried forward? - No, it can only be carried forward
1 tax year.
Small gifts exemption - donor can gift 250 to any one person in any one tax year
If A GIFT totals more than 250, becomes totally chargeable
, ICAEW Business Planning Taxation 2024 - BPT Open
Book Notes 2024 (Achieved 89%) - ACA Professional
Level
Would £250 gifted to 10 nephews, daughters and sons become chargeable to
IHT? - No.
As long as the amount doesnt exceed £250.
Marriage Exemption - Exempt Amounts:
£5000 parents
£2500 grandparents
£1000 anyone else
IHT - Normal Expenditure out of Income - 3 Criteria
1. Paid out of income.
2. Regular
3. Donor maintains standard of living.
These gifts/transfers are exempt.
Two categories of lifetime transfers - 1. Chargeable lifetime transfers
2. Potentially Exempt transfers
Difference between a CLTs and PETs - CLT - Chargeable Lifetime Transfer
1. Gift to a trust/company
, ICAEW Business Planning Taxation 2024 - BPT Open
Book Notes 2024 (Achieved 89%) - ACA Professional
Level
2. Immediately chargeable
3. 20% tax rate
PET - Potentially Exempt Transfer
1. Gift to another individual.
2. Taper relief applies if transferred under 7 years
3. Annual exemption applies.
NRB - £325,000
Steps to determine IHT payable. - 1. Identify transfers in the 7 years before death.
2. Apply any Exemptions.
3. Use the NRB and apply against estate.
4. Apply Taper relief
5. Excess is taxed at 40%
6. Deduct any IHT already paid (CLTs)
If the donor transfers £10,000 into a trust but dies within 7 years of the transfers,
how much tax is paid and what is the affect? - 40% tax rate if the donor dies
within 7 years.
Brought back into the estate.
, ICAEW Business Planning Taxation 2024 - BPT Open
Book Notes 2024 (Achieved 89%) - ACA Professional
Level
How does the amount of tax paid vary depending on who has paid the tax into a
trust? - Donor - 25%
Trustees/donee - 20%
Life Tax - Applies only to CLTs.
Tax charged at the time.
Rate is 20%.
Gross chargeable transfer -
20/80 rule IHT - Applies where the donor bears the the lifetime tax.
Net grossed up.
If the trust paid there would be no gross up.
If the donor pays the Lifetime tax has does this affect the Nil Rate Band? - More
Nil Rate Band will be used.
Gifts will be grossed up.
