Inheritance tax is charged on property transfer as well as cash in both cases of transfer on death and lifetime transfers. This is a different kind of tax, which is paid by donees instead of donors of the properties and assets.
Who are Chargeable Persons for IHT?
Inheritance tax is levied on the trusts and individuals residing in the UK.
What Is A Chargeable Property?
– If a UK domiciled individual has property in other countries, such properties are chargeable according to the law.
– And a non-UK domiciled individual will be paying IHT on the properties within the UK only, and other overseas properties and assets will be IHT exempt.
When it’s Become Chargeable?
When a taxable individual makes a transfer of a chargeable property, IHT becomes applicable, and ignoring to file, or late filing IHT returns to HMRC has consequences for the respective individuals. There are two major types of inheritance transfers,
Potentially Exempt Transfer:
If a lifetime gift has been made to an individual, the IHT will not be applicable instantly, as it depends on the life of the donor. It will be chargeable if the donor passes away within 7 years of making the gift, and if the donor survives for 7 years after gifting, no IHT will be chargeable. That is why it is called potentially exempt transfer.
Transfer to Non-charitable Trusts:
While one makes a gift to non-charitable trusts, it becomes chargeable instantly in the life of the donor.
Payment of Lifetime Inheritance Tax
The IHT payments depend on the Time of transfer made as;
First six months of the tax year
If the transfer was made in the initial 6 months of the tax year, that is on 30th September; the related IHT is must be paid by the 30th of April after the tax year.
Last six months of the tax year
And if the transfer was made after 30th September of a tax year, the IHT will be essential to be paid within the 6 months from the end of the transfer month.
Why is Planning Essential for Inheritance Tax Return?
It becomes essential to plan IHT in order to;
– Minimize payable tax
– Maximizing transfers for the next generation
And the planning is done in the form of
– Lifelong tax planning
– Death Estate Planning
– Planning for inter-spouse transfers
101Accountant is fully competent to provide you with all the support that you need to plan IHT in a better way. Our team of professionals is there to facilitate you meet all the conditions that are required to avail exemptions and reliefs.
Possible Exemptions and Reliefs
There are multiple types of exemptions accessible on lifetime gifts and transfers, including small gift exemptions, annual exemption, marriage exemptions, transfer to charities, transfer to political parties, normal expenses out of income, and transfers within civil partners and spouses.
Along with exemptions, there are some reliefs, too, like tapper relief, fall in value relief, agricultural property relief, business property relief, double taxation relief, and quick succession relief.
However, to take advantage of all such reliefs, there are certain terms and conditions to meet; otherwise, HMRC will not entertain you with relief. For example, for business property relief, you are essential to satisfy terms like a trading business and minimum period conditions; otherwise, the relief will be withdrawn.
But in the presence of 101Accountant, you do not need to worry about as our professionals will be providing you with continuous assistance and support in fulfilling the conditions. From assessments to availing reliefs and exemptions in maximum capacity, you will find us a trustable partner for your tax matters. Our professionals will also guide you regarding death estate, such as saving tax through increasing charitable legacy, utilizing a deed of variation, along with the related property idea that is unique to IHT.
Shares and Securities
Special rules are applicable to shares and securities that are calculated considering CGT implications. Rules apply to the appraisal of all the quoted securities and shares, including;
– Investment trusts
– Open-ended investment companies
– Gilt-edged securities
– Venture Capital Trusts
– Real Estate Investment Trusts
Unquoted securities and shares necessitate an appraisal to be agreed on the terms of the Share Valuation Division of the HMRC. 101Accountant can offer you all the solutions related to Inheritance tax and return filing and other aspects needed for making accurate calculations. 101Accountant has the skills and abilities to facilitate you in planning tax payments, getting maximum reliefs, and upholding compliance with the set regulations.