The following Trusts and Inheritance Tax guidance note by Tolley provides comprehensive and up to date tax information covering:
Generally speaking, inheritance tax (IHT) is charged only on individuals and trusts. However, to prevent avoidance of the tax, the charge is extended to close companies in the following cases:
Consequently, where a settlor is a shareholder in a close company, you may need to consider the rules below to ascertain whether he has made a transfer that is subject to IHT.
The rules will also require consideration where the settlor is a participator because he:
IHTA 1984, s 102(1)
A close company is defined, as it is for corporation tax, as a company under the control of five or fewer participators or of any of its directors. This includes, for the purposes of IHT, companies resident outside the UK.
For a general discussion on close companies, see the Definition of a close company guidance note in the OMB module (subscription sensitive).
A charge to IHT may arise where a close company makes a gift (or other transfer of value)
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