How to Avoid Inheritance Tax

Contents

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