An estate planning vehicle established for the benefit of a young person, becoming absolutely entitled to the trust property on or before their 25th birthday, with specific inheritance tax implications.
An inheritance tax relief available on the transfer of agricultural property under specified conditions, with relief rates at 50% or 100% depending on possession status and leasing history.
An exempt transfer under inheritance tax legislation allowing £3,000 to be given each year as a gift without liability to inheritance tax. This amount has remained unchanged since 6 April 1981.
Business Property Relief (BPR) is a form of inheritance tax relief available on certain types of business property, designed to protect family businesses from the burden of inheritance tax upon the death of an owner.
A chargeable transfer is a lifetime gift not covered by any of the exemptions, making it liable to inheritance tax. This can include potentially exempt transfers or payments into a discretionary trust.
A comprehensive guide to understanding death duty, also known as estate duty, a tax levied on the estate of a deceased person.
The term 'Death Tax' is commonly used to refer to state inheritance taxes, though it is frequently conflated with estate taxes. It represents the taxation imposed on the transfer of wealth upon an individual's death.
A deed by which the beneficiary under a will or an intestacy redirects the gift to some other person (who may or may not be a beneficiary of the estate). Provided this is done within two years of the deceased's death and statutory requirements are complied with, the redirection is not treated as a gift for inheritance tax or capital gains tax purposes.
A Discretionary Trust is a type of trust where the shares of each beneficiary are not fixed by the settlor but can be varied at the discretion of the trustees or another appointed person.
Explore estate duty, a type of tax levied on estates of deceased individuals before inheritance taxes. Understand its impact, calculation, examples, and frequently asked questions.
Exempt transfers are specific types of gifts or transfers that result in no liability to inheritance tax due to their special exemptions under tax law.
An exit charge is the tax imposed under inheritance tax regulations when an asset is removed from a discretionary trust.
A gift with reservation is a type of gift where the donor retains some benefit from the asset despite having transferred ownership to another party. This concept is pertinent in taxation and estate planning.
Gifts made during an individual's lifetime, which have specific implications for inheritance tax based on their amount, occasion, and recipient.
A grossed-up gift is the result of adding the gift tax paid by the decedent of the estate back to the gift when it is included in the gross estate.
A heritage asset is a tangible asset deemed historically, artistically, or scientifically significant, often recognized for its cultural or knowledge contribution and distinctive accounting treatment.
Inheritance Tax (IHT) is a tax on the estate, such as money, property, and possessions, of someone who has died. IHT is often seen as significant, as it can substantially reduce the value that beneficiaries receive from an estate.
Inheritance Tax (IHT) is a tax introduced in the Budget of 1986, charged on the estate of a deceased individual domiciled in the UK or on UK property owned by a non-domiciled individual. It applies retrospectively on certain lifetime gifts and includes exemptions and potential allowances.
An interest-in-possession trust ensures that the income generated by the trust's assets goes to a specific beneficiary or beneficiaries for a fixed period or until the life tenants' death. Subsequently, the capital passes to the remainderman.
The first portion of a chargeable transfer or the estate on death that is subject to a nil rate of inheritance tax. For 2016-17, the nil-rate band is £325,000. From April 2008, it became possible for spouses and civil partners to transfer their nil-rate band to the surviving partner on death, thereby effectively raising the threshold at which tax becomes payable to £650,000.
A Potentially Exempt Transfer (PET) refers to a gift that may not be immediately subject to inheritance tax, provided the donor survives for a period of seven years after making the transfer. PETs play a significant role in estate planning and gift tax strategies.
A potentially exempt transfer (PET) is a lifetime gift by an individual that becomes exempt from inheritance tax if they survive seven years beyond the date of the gift. If the donor passes away within seven years, inheritance tax liability may arise.
A valuation of all the assets included in the estate of a deceased person at the date of his or her death, taking into account any restrictions on the use of the assets. This value is primarily agreed upon with HM Revenue and Customs for the purpose of calculating inheritance tax.
A Progressive Tax is a tax mechanism where the tax rate increases as the tax base increases. This kind of tax structure aims to distribute the tax burden more equitably based on the taxpayer's ability to pay.
Quick-succession relief is designed to prevent the severe double taxation of inheritance tax on the same property within a short timeline — specifically when two related individuals pass away within five years of each other.
A relevant property trust is defined for inheritance tax purposes and involves taxation upon creation, distribution, and every tenth anniversary. It excludes interest-in-possession trusts, 18--25 trusts, or trusts for bereaved minors.
Settled property refers to property that is included in an interest-in-possession trust, where beneficiaries have the right to benefit from the property during their lifetime.
The place in which an asset is held to be located, determining the applicable laws for rights and liabilities associated with the asset.
A body of specialized tax lawyers appointed to hear appeals against assessments to various taxes, including income tax, corporation tax, capital gains tax, and inheritance tax.
The specified domain on which a tax is levied, such as an individual's income for income tax, the estate of a deceased person for inheritance tax, and the profits of a company for corporation tax.
A Tax Deposit Certificate is issued by HM Revenue and Customs (HMRC) to a taxpayer who has made an advance payment for future liabilities such as income tax, capital-gains tax, or inheritance tax. It offers an interest-bearing option for managing tax obligations efficiently.
Tax relief is a reduction in the amount of tax that an individual or corporation owes to the government, typically through various statutory provisions. In the UK, tax relief can be applied to income tax, capital gains tax, and inheritance tax through different mechanisms such as allowances, exemptions, and credits.
A tax return is an annual statement of income and personal circumstances filed by a taxpayer to calculate and report individual tax liabilities and claim personal allowances.
A levy imposed on individuals and corporate bodies by central or local governments to finance government expenditures and implement fiscal policies, excluding payments for specific services rendered.
A periodic inheritance tax charge on most forms of discretionary trusts, structured to balance the lack of generational transfer taxes.
Transfer tax is a tax paid upon the passing of title to property or to a valuable interest. This tax can apply to real estate transactions and certain financial transactions.
