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How to Avoid Inheritance Tax

Chapter 1. Introduction

1.1 There Are Two Certainties in Life
1.2 Guide Overview
1.3 A Brief History of Inheritance Tax
1.4 Why Worry?
1.5 Where Does the Tax Come From?
1.6 Married Couples and Registered Civil Partners
1.7 Changes to the UK Tax Authorities
1.8 Tax Years
1.9 Trust Terminology
1.10 A Word of Caution About Inheritance Tax Planning

Chapter 2. Inheritance Tax Principles

2.1 Transfers of Value
2.2 Who Is Liable for Inheritance Tax?
2.3 Who Actually Pays the Tax?
2.4 Grossing Up
2.5 Who Are the Personal Representatives?
2.6 Who Pays the Tax on Lifetime Transfers?
2.7 Collection of Tax
2.8 How Much Tax Is Payable?
2.9 What Is Your Estate?
2.10 The Basic Calculation on Death

Chapter 3. Payment And Administration

3.1 Making the Payment
3.2 Accounts
3.3 Excepted Estates
3.4 Penalties
3.5 Administration

Chapter 4. Exemptions and How To Maximise Them

4.1 What Is an Exemption?
4.2 The Nil Rate Band
4.3 The Spouse Exemption
4.4 Doubling the Nil Rate Band
4.5 The Nil Rate Band Will Trust
4.6 The Widow's Loan Scheme
4.7 The Daughter-In-Law Plan
4.8 Gifts to Charities and Other Exempt Bodies
4.9 Death on Active Service

Chapter 5. Lifetime Transfers

5.1 Inheritance Tax on Lifetime Transfers
5.2 Chargeable Lifetime Transfers
5.3 Potentially Exempt Transfers
5.4 Problems with PETs
5.5 Death within Seven Years of a Lifetime Transfer
5.6 Relief for Reduction in Value
5.7 Timing of Lifetime Gifts
5.8 Evidence
5.9 Gifts with Reservation
5.10 Why Not Just Give it All Away?

Chapter 6. Lifetime Exemptions

6.1 Absolute Exemption
6.2 The Annual Exemption
6.3 The Small Gifts Exemption
6.4 Using the Annual and Small Gifts Exemptions Effectively
6.5 Gifts in Consideration of Marriage
6.6 Maintenance of Family
6.7 Dependent Relatives
6.8 Normal Expenditure Out of Income
6.9 Transfers Allowable for Income Tax or Conferring Retirement Benefits

Chapter 7. The Tax Benefits of Business Property

7.1 Introduction
7.2 When Is Business Property Relief Available?
7.3 Just How Useful Is Business Property Relief?
7.4 Qualifying Businesses – Basic Principles
7.5 Property Investment or Letting Businesses
7.6 Other Businesses Exploiting Land
7.7 What Does 'Wholly or Mainly' Mean in Practice?
7.8 Relevant Business Property
7.9 What Is the Value of a Business?
7.10 Business Property Relief for Shares and Securities
7.11 The Minimum Holding Period
7.12 Replacement Business Property
7.13 Extra Rules for Lifetime Transfers
7.14 Lifetime Transfers of Business Property Becoming Chargeable on Death
7.15 How to Preserve Your Business Property Relief
7.16 Maximising Business Property Relief
7.17 Sheltering Investments with Business Property Relief
7.18 Business Succession Planning
7.19 Business Property Relief for Smaller Shareholdings
7.20 The Aim Exemption
7.21 Agricultural Property Relief
7.22 The Safety Net

Chapter 8. Miscellaneous Matters

8.1 Valuations
8.2 Related Property
8.3 Quick Succession Relie
8.4 National Heritage Property

Chapter 9. An Introduction To Trusts

9.1 What Is a Trust?
9.2 Where Do We Stand with Trusts Today?
9.3 What Types of Trust Are There?
9.4 Interest in Possession Trusts
9.5 Life Interest Trusts
9.6 Bare Trusts
9.7 IHT Treatment of Old IIP Trusts
9.8 IHT Treatment of New IIP Trusts
9.9 Discretionary Trusts
9.10 Accumulation and Maintenance Trusts
9.11 Trust for a Bereaved Minor
9.12 Disabled Trusts
9.13 Summary So Far
9.14 The Relevant Property Regime
9.15 Ten-Year Anniversary Charges
9.16 Exit Charges
9.17 Death of Settlor

Chapter 10. IHT Planning with Trusts

10.1 Using Relevant Property Trusts
10.2 The Discretionary Trust Shelter
10.3 Serial Trusts
10.4 How Useful Is the Discretionary Trust Shelter?
10.5 How to Avoid Anniversary and Exit Charges
10.6 Why Not Just Give Assets Directly to the Beneficiaries?
10.7 How to Avoid Inheritance Tax and Capital Gains Tax at the Same Time
10.8 Limitations to Planning with Discretionary Trusts
10.9 Reversionary Interest Trusts
10.10 Loan Trusts

Chapter 11. Practical Aspects of Inheritance Tax Planning

11.1 The Bigger Picture
11.2 Commercial Issues
11.3 Interaction with Other Taxes
11.4 Jointly Held Property
11.5 Mortgages
11.6 Residential Care Fees
11.7 Wills and Intestacy
11.8 Statutory Rights
11.9 Life Assurance
11.10 Insuring for Inheritance Tax Liabilities
11.11 Pensions
11.12 Lottery Syndicates

Chapter 12. Interaction with Capital Gains Tax

12.1 The Uplift on Death
12.2 The Capital Gains Tax vs Inheritance Tax Dilemma
12.3 Business Assets
12.4 Gifts of Business Assets
12.5 Transfers to Spouses
12.6 Capital Gains Tax and the Family Home
12.7 Capital Gains Tax and Gifts with Reservation
12.8 Other Assets
12.9 Capital Gains Tax and Trusts

Chapter 13. The Family Home

13.1 When Our Main Asset Becomes Our Main Liability
13.2 Move Out and Then Give it Away
13.3 Sell Up and Give Away the Proceeds
13.4 Re-Mortgage and Give Away the Proceeds
13.5 Re-Mortgage and Buy an Annuity
13.6 Sale at Market Value
13.7 The Widow's Loan Scheme and the Family Home
13.8 Leave a Half Share to the Children
13.9 The 'Full Consideration' Method
13.10 Co-Ownership
13.11 Shearing
13.12 The Three-Way Split

Chapter 14. Income Tax Charges On Pre-Owned Assets

14.1 Moving the Goalposts
14.2 Exemption
14.3 Opting Out
14.4 Implications for Planning with the Family Home
14.5 Tax Charges and Domicile

Chapter 15. The Inheritance Tax Planning Timetable

15.1 It's Never Too Early to Start
15.2 Marriage
15.3 Becoming a Parent
15.4 Adult Children
15.5 Your First Grandchild
15.6 Life Expectancy Over Seven Years
15.7 Life Expectancy Three to Seven Years
15.8 Life Expectancy Two to Three Years
15.9 Deathbed Planning
15.10 Deeds of Variation

Chapter 16. Domicile

16.1 What Is Domicile?
16.2 Domicile of Origin
16.3 Domicile of Choice
16.4 A Guide to Emigration
16.5 Retaining a Domicile of Origin
16.6 Domicile and Marriage
16.7 Administration

Appendices:

A. Inheritance Tax Exemptions 2006/2007
B. Double Tax Treaties
C. Connected Persons
D. Example Documentation
E. National Bodies