Inheritance Tax Return

Inheritance Tax Return

Inheritance tax return is a tax which is charged on transfers of property or cash, both on lifetime transfers and transfers on death. This is a different type of tax in terms of payment i.e. IHT is paid by the donee instead of a donor of the property.

Who is a chargeable person?

Inheritance tax is charged on UK resident individuals and trusts.

What is a Chargeable property?

  1. If an individual is UK domiciled worldwide property will be chargeable.
  2. If an individual is non-UK domiciled only UK property would be chargeable and all the overseas assets will be exempt.

When it’s become chargeable?

When a chargeable person makes a transfer of value of a chargeable property, implications of IHT may apply. There are two types of transfers,

1st one is potentially exempt transfer, If a lifetime gift is made to an individual, then IHT has not become chargeable instantly, instead it depends upon the life of the donor, it becomes chargeable only if the donor dies within 7 years of making the gift, or if he survives for 7 years after making gift, No IHT will be payable. Therefore it is called potentially exempt.

On the other hand, if a gift is made to trusts (except a charitable trust), then it becomes instantly chargeable in the life of the donor.

Payment of lifetime IHT:

Payment will depend on whether the transfer was made in:

  1. First six months of the tax year
    That is on or before 30th September of the tax year in which transfer was made, In this case, relevant IHT must be paid by 30th April after the tax year.
  2. Last six months of the tax year
    Which is after 30th September of the tax year of transfer, In this case, relevant IHT must be paid within six months from the end of the month of transfer.

Why is Planning required in Inheritance Tax Return?

The IHT is planned so that to

  • Minimize the amount of Tax payable
  • Maximize the inheritance transferred to the next generation

Planning is done in form of

  • Lifetime tax planning
  • Death estate planning
  • Planning through inter-spouse transfers

WeAccountax will provide you with all the support which you need to plan the inheritance tax return. Our team will help you in meeting the conditions which need to be satisfied to avail different exemptions and reliefs available.

Exemptions and Reliefs

There are many types of exemptions available on lifetime gifts, such as the annual exemption, small gift exemption, transfer within spouses and civil partners, marriage exemption, transfer to political parties, transfers to charities, normal expenditure out of income.

As well as relief such as taper relief, fall in value relief, business property relief, agricultural property relief, quick succession relief and double taxation relief.

To take benefits of certain reliefs conditions must be met otherwise HMRC withdraws the relief For example, in Business Property Relief you need to satisfy certain conditions like minimum period and trading business condition and if not meet the relief will be withdrawn.

But you don’t need to worry because WeAccountax will provide you with continuous support and assistance in satisfying the conditions.

From calculation to availing exemptions and reliefs, and from the assessment of the dates of gifts, to the assessment of allowable deductions in the death estate, you will find us trustworthy for your tax affairs.

Also, we will guide you about rules relating to death estate like saving tax by increasing a charitable legacy, using a deed of variation, together with the Related Property concept which is unique to IHT.

Shares and securities

Special rules apply to shares and securities which are calculated keeping in view the Capital Gains Tax implications.

Rules apply to valuation of all quoted shares and securities

  • Investment trusts
  • Open-ended investment companies
  • Gilt-edged securities
  • Venture Capital Trusts
  • Real Estate Investment Trusts

Unquoted shares and securities require a valuation to be agreed by Share Valuation Division of HMRC.

WeAccountax will provide you with all the inheritance tax solutions, required for these complex calculations.

Together with the planning to pay different tax which will be charged, WeAccountax will also help you in planning the installments of Inheritance Tax.

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