inheritance tax


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Related to inheritance tax: capital gains tax, gift tax, estate 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 ?
So from 2020, married couples and civil partners - who are entitled to double the allowance - will be able to pass on assets worth up to PS1m to their children or grandchildren, which includes the family home, without paying any inheritance tax.
Paul also states that inheritance tax planning is a complex area, and professional advice should always be taken.
However, the freezing of thresholds has effectively made inheritance tax a tax for middle England with an increasing number of people becoming liable.
Speak to your solicitor or tax advisor to find out what your options are, and have a look on the HMRC website to learn more about inheritance tax and the different exemptions.
Below this amount, families pay no inheritance tax at all.
The party later released a statement saying: "People should be clear that the promise we made on inheritance tax is a promise we will keep.
He said: "Having a financial background obviously helped, but I also knew the need to find the right professional advice in avoiding the consequences of Inheritance Tax.
The amount of inheritance tax (IHT) revenue collected in the first half of 2006 matches total IHT revenue collected over the full financial year 1997/98, only eight years ago.
Q: YOU recently answered a question by saying a wife pays no inheritance tax on her husband's estate.
I have received a letter this week from a reader concerned at the amount of inheritance tax that will be paid on her estate when she dies.
Locally, growers in Ventura County's $1 billion agricultural industry - which is split over the candidates - said striking down the inheritance tax is vital to preserving family farms.
Fearing an ever-widening gap between the rich and poor, a top Chinese tax official said Friday the government will introduce an inheritance tax affecting 1% to 3% of the wealthiest members of the population, official media reported.