Chargeable transfer definition

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Heritage property—the conditional exemption

Heritage property—the conditional exemption Conditional exemption from inheritance tax (IHT) on a transfer of value of a qualifying asset is available at the discretion of the Treasury (assessed via the appropriate body, currently the Arts Council England). The aim, as with many of the heritage property reliefs, is to help ensure that pre-eminent heritage assets are retained in the UK and protected for the benefit of the nation as a whole rather than sold to private dealers. In order for a transfer to be conditionally exempt, certain conditions must be met and the owner (or other relevant person) must give undertakings that the item will be maintained and that reasonable public access will be allowed. Conditions for exemption to apply In order for the conditional exemption to apply, certain conditions must be met: • the property transferred must qualify (and be designated by the appropriate body) as being pre-eminent for its national, scientific, historic or artistic interest or in the case of land and buildings for its scenic,...

Estate administration—interests in trusts and other estates

Estate administration—interests in trusts and other estates In administering the assets of an estate, there are some assets and liabilities that can be easily overlooked. As well as checking what assets and liabilities there are, the personal representatives (PRs) need to make decisions about which assets to deal with first as well as dealing with matters that they may discover affected the deceased in their lifetime, such as ongoing litigation. Interests arising under a trust The deceased may have been a beneficiary of a trust and in some cases, the value of the trust interest accrues to the deceased’s estate on death for inheritance tax (IHT) purposes. There are a number of types of trust that may have included the deceased as a beneficiary, namely: • discretionary trust—where the PRs are aware that the deceased was a member of a class of potential beneficiaries (or had a non-qualifying interest in possession in a trust) they should notify the trustees of the death and the trustees may request the...

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Explanatory note/summary for a client's Discretionary trust

Explanatory note/summary for a client's Discretionary trust [Your] Discretionary trust—[name of settlor]—[explanatory note OR summary] This [explanatory note OR summary] explains the main provisions of your Discretionary Trust. Please read this [explanatory note OR summary] and your Discretionary Trust carefully. If, after reading this [explanatory note OR summary] and your Discretionary Trust, you conclude that any of the provisions of your Discretionary Trust do not accurately reflect your wishes, please let [me OR [name of person to contact]] know [before you sign your Discretionary Trust]. 1 Parties This clause sets out that you are the person making the Discretionary Trust, known as the settlor, and that the first trustees are [insert names]. As previously discussed, it is important that you only appoint trustees who you trust entirely and who you are sure will get on well together. 2 Background The Background sets out the circumstances surrounding the creation of the Discretionary Trust. It sets out the legal position that the...

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A, who is UK-domiciled, but tax resident in Thailand, made gifts of Thai-situs assets within the last seven years. If A loses their UK domicile before the expiry of seven years from the date of the gifts, how will the gifts be treated for UK tax purposes?

A, who is UK-domiciled, but tax resident in Thailand, made gifts of Thai-situs assets within the last seven years. If A loses their UK domicile before the expiry of seven years from the date of the gifts, how will the gifts be treated for UK tax purposes? A potentially exempt transfer (PET) is defined as a transfer of value made by an individual, which apart from section 3A of the Inheritance Tax Act 1984 (IHTA 1984), would be a chargeable transfer. We shall examine each element of this definition as follows: • a ‘chargeable transfer’ is a transfer of value which is made by an individual but is not (by virtue of IHTA 1984, Pt II or any other enactment) an exempt transfer • IHTA 1984, s 3(1) defines a transfer of value as ‘a disposition made by a person…’ IHTA 1984, s 3(2) states that ‘For the purposes of subsection (1) above no account shall be taken of the value of excluded property which ceases...

When distributing an estate where the testator has left 10% of their estate to charity in order for the reduced IHT rate of 36% to be claimed, is the calculation of the baseline legacy to charity made as at the date of death (ie using the estate valuation in the IHT account) or is the amount of the legacy recalculated at the end of the administration, based on the realised estate value, and then distributions made?

When distributing an estate where the testator has left 10% of their estate to charity in order for the reduced IHT rate of 36% to be claimed, is the calculation of the baseline legacy to charity made as at the date of death (ie using the estate valuation in the IHT account) or is the amount of the legacy recalculated at the end of the administration, based on the realised estate value, and then distributions made? Section 4(1) of the Inheritance Tax Act 1984 (IHTA 1984) provides that on the death of any person, inheritance tax shall be charged as if, immediately before his death, he had made a transfer of value and the value transferred by it had been equal to the value of his estate immediately before his death. IHTA 1984, s 5 defines a person's estate as being

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Question of the week: Does the inheritance tax exemption for transfers between spouses apply where both spouses are non-UK domiciled and make a transfer of UK situs assets between them?

This Q&A considers the exemption from inheritance tax on a transfer between spouses who both have non-UK domicile status.

Question of the week: How is the available nil rate band calculated for an exit charge before the first-ten year anniversary of the creation of a testamentary nil rate band discretionary trust? Would pecuniary legacies made under the Will establishing the trust reduce the amount of the available nil rate band for the purposes of calculating the exit charge?

This Q&A considers how to determine the available nil rate band (NRB) for an exit charge before the first ten-year anniversary of the creation of a testamentary NRB discretionary trust and whether pecuniary legacies made under the Will establishing the trust reduce the amount of NRB available.