inheritance tax

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Related to death duty: inheritance tax

inheritance tax

broadly, a tax on wealth transfers i.e. gifts made in lifetime or on death. The main charge is on everything beneficially owned at death, including property in which the deceased had an INTEREST IN POSSESSION. To prevent deathbed gifts being used to avoid the tax, gifts made within seven years of death are also charged but are POTENTIALLY EXEMPT TRANSFERs (PET) in the meantime. However, some lifetime gifts are immediately chargeable if the assets are transferred into certain types of discretionary trust. Whilst within such trusts and on exiting them, the assets are liable to a special regime of inheritance tax. The territorial scope of the tax is determined by the domicile of the individual. Those who are domiciled in the UK are chargeable on their worldwide assets and those who are not on assets situated in the UK. The value chargeable may be reduced by AGRICULTURAL PROPERTY RELIEF or BUSINESS PROPERTY RELIEF. Exemptions can apply for small gifts, maintenance payments, wedding gifts, gifts to charities and national museums and certain other bodies. Some of these exemptions have monetary limits. There is a taxable threshold below which the rate is zero. Earlier gifts obtain the benefit of this threshold before later gifts. In determining the tax on the assets held at death, a deduction is allowed for funeral expenses and debts outstanding, including any unpaid taxes. The primary responsibility for paying the tax relating to a lifetime gift which has become chargeable falls upon the recipient. Tax payable on the estate of the deceased is primarily payable by the executors, except to the extent of any tax relating to property held in a trust in which the deceased had an interest in possession, which is payable from the assets of that trust. It is possible to vary an inheritance after the death if all the beneficiaries who would inherit less as a result of the change so agree. This can result in significant reductions in the inheritance tax liability. However, the variation must be made within two years of the death and the instrument of variation must state that it is to take effect for inheritance tax purposes. Any inheritance tax is calculated as if the variation was effectively backdated to the date of death. A similar provision can be applied for CAPITAL GAINS TAX.
References in periodicals archive ?
Death Duty fell at the last when well held behind Footpad in the Grade 1 R a c i n g P o s t N o v i c e C h a s e a t Leopardstown on St Stephen's Day, but Gigginstown spokesman Eddie O'Leary revealed he had suffered an injury early in the race.
The inclusion of Death Duty is something of a surprise as he seemed certain to stay at twoand-a-half miles following his Drinmore Chase victory.
This basic calculation derived from the death duty returns is made more accurate in four main ways.
The indications had been that Death Duty, unbeaten in three starts over fences, would be in action at Grade 2 level over two and a half miles at Limerick the same day.
Favourite for the Arkle at Cheltenham, Footpad will face a small field on Tuesday, when Gigginstown can choose from Avenir D'Une Vie, Tombstone, Dinaria Des Obeaux and Death Duty, which Gordon Elliott has indicated is more likely to run in the Grade 2 McMahon's Builders Novice Chase in Limerick On Tuesday.
The Tories have vowed to raise the death duty threshold to pounds 1million - a move Labour strategists say has backfired.
The accuracy of this figure may be questioned by the Treasury but there is no argument with the fact that in the past six years proceeds from death duty have risen from pounds 2 billion to pounds 3.
The event was held to promote the feature film script of Death Duty.
Chancellor Gordon Brown could raise an extra pounds 147m a year while cutting death duty for almost nine out of 10 people, according to the Institute for Public Policy Research.
Either side of that monstrous performance, Mengli Khan stamped his authority all over his Royal Bond Novice Hurdle opposition, and Death Duty made all for a smooth victory in the Drinmore Novices' Chase.
Novices Mengli Khan and Death Duty impressed as part of the Elliott/Gigginstown treble, but the undoubted star of the show was classy mare Apple's Jade which slammed Nichols Canyon in the Bar One Racing Hatton's Grace, joining the elite band of dual-winners of the race.
For many people paying death duty tax that starts at 40 per cent after your initial exemption is a key issue, but one which must be weighed against the need to maintain income at a certain level as this is also of prime importance,' said Phil Cook, partner and head of the specialist tax division at Clement Keys.