The following Trusts and Inheritance Tax guidance note Produced by Tolley provides comprehensive and up to date tax information covering:
Throughout this note, references to spouses include civil partners. The term ‘partner’ means both a member of a married couple and a member of a registered civil partnership.
Transfers between UK domiciled spouses are wholly exempt for the purposes of UK inheritance tax, whether made in lifetime or death. Where the deemed domicile rules in IHTA 1984, s 267 apply, the full spouse exemption also applies.
General planning using the spouse exemption is covered in the Using the spouse exemption guidance note. Domicile is discussed in the Domicile for UK inheritance tax guidance note.
However, where the transfer is by a UK domiciled spouse to a non-UK domiciled one the exemption is capped at an amount equivalent to the nil rate band, currently £325,000. Thus, a UK domiciled spouse is able to transfer up to twice the value of the nil rate band to his non-UK domiciled partner before incurring a tax liability. There is a distinction though between the two allowances. The non-domiciled spouse exemption is a lifetime limit whereas the nil rate band is refreshed every seven years. For lifetime gifts that exceed the spouse exemption, the balance is initially a potentially exempt transfer (PET) which only becomes chargeable if the donor dies within seven years. Example 1 illustrates how this works in practice.
Where the asset is transferred from a non-domiciled spouse to their UK domiciled partner, the full spousal exemption applies, for the simple reason that the assets will now for
**Free trials are only available to individuals based in the UK. We may terminate this trial at any time or decide not to give a trial, for any reason.
Access this article and thousands of others like it free for 7 days with a trial of TolleyGuidance.
Read full article
Already a subscriber? Login
‘Hold-over’ relief allows for the deferral of a gain that would otherwise arise in relation to a disposal. No capital gains tax (CGT) is due in respect of the disposal, but the base cost of the asset for the transferee for the purpose of a future disposal is reduced by an amount equal to the gain
The basic rule is that all benefits provided to an employee by reason of their employment are taxable unless there is a specific exemption or other rule that means they are not chargeable to tax.ExemptionsThe main exemptions for employee benefits are in ITEPA 2003, ss 227–326B (Pt 4).Below is an
The corporate interest restriction (CIR) essentially limits the amount of interest expense a company can deduct from its taxable profits if the interest expense is over £2 million. The actual mechanics of the CIR calculation are highly complex (the legislation is over 150 pages long) and are
Class 1 and Class 1AClass 1 and Class 1A are the categories of NIC that can be charged on expenses reimbursed and benefits provided to employees. These classes are mutually exclusive. A benefit cannot be subject to both Class 1 and Class 1A NIC. Three requirements must be met before Class 1A NIC is
To view our latest tax guidance content, sign in to Tolley Guidance or register for a free trial.