The following Trusts and Inheritance Tax guidance note Produced by Tolley provides comprehensive and up to date tax information covering:
This guidance note provides an overview of the basic principles of inheritance tax, when it is charged and how it is calculated. It contains links and references to other parts of the module where more details can be found.
Inheritance tax is based on the concept of a transfer of value. A transfer of value is defined as a ‘disposition made by a person (the transferor) as a result of which the value of his estate immediately after the disposition is less than it would be but for the disposition’. Thus the definition identifies the key event as a ‘disposition’.
A disposition is, typically, a gift. There must be an element of bounty, otherwise the value of the transferor’s estate would not decrease. A disposition can be:
a lifetime gift from one person to another. The gift could be of money or any type of asset, such as a picture, shares, or land
a lifetime gift of property from a person to trustees who will look after the property for the beneficiaries of the trust
a gift with reservation. That is where a person transfers ownership of property but retains rights or benefits from it. For details of the treatment of such gifts, see the Gifts with reservation ― overview guidance note and other notes in that sub-topic
the transfer, when someone dies, of the whole of his property to new owners
a distribution of trust assets to a beneficiary
In addition to occasions when property is actually transferred to a new owner, a disposition can occur when certain events or arrangements cause a diminution in the value of property. These notional dispositions may arise:
when the capital or share rights of a close company are altered. See the Close companies guidance note
where property ceases to be subject to a reservation of benefit.
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