(b) Calculate the inheritance tax (IHT) liability arising as a result of Christopher’s death. (11 marks)

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第1题：

(d) Advise on any lifetime inheritance tax (IHT) planning that could be undertaken in respect of both Stuart and

Rebecca to help reduce the potential inheritance tax (IHT) liability calculated in (c) above. (7 marks)

Relevant retail price index figures are:

May 1994 144·7

April 1998 162·6

正确答案：
(d) Stuart is not making use of his nil rate band, as all assets are transferred, exempt from inheritance tax (IHT), to Rebecca (as
spouse) on death. He should consider altering his will to transfer an amount equivalent to the nil rate band to his son, Sam.
If Stuart dies before altering his will, Rebecca can elect to make a Deed of Variation in favour of Sam instead. This will have
the same effect as the above.
Care should be taken in determining which assets are subject to this legacy. The Omega plc shares should not be transferred
to Sam as they currently attract 50% BPR. Instead, assets not subject to any reliefs (such as the insurance payout or cash
deposits) should be used instead. By doing this, IHT of ￡105,200 (￡263,000 x 40%) could be saved on the ultimate death
of Rebecca.
It is too late for Stuart to make use of potentially exempt transfers (PETs) as no relief is obtained until three years have passed,
and full relief only occurs seven years after making the gifts. The same would also apply to Rebecca if she were to die on 1
March 2008. However, as she is currently in good health, she may decide to make lifetime gifts, although she should also
not gift the Omega plc shares for the reasons stated above as any gift other than of the entire holding will result in the loss
of BPR on the remainder.
Both individuals should make use of their annual exemptions (￡3,000 per person per year). The annual exemptions not used
up in the previous year can be used in this current year. This would give a saving of ￡2,400 each (3,000 x 2 x 40%).
Exemptions for items such as small gifts (￡250 per donee per year) are also available.
Gifts out of normal income should also be considered. After making such gifts, the individual should be left with sufficient
income to maintain their usual standard of living. To obtain the exemption, it is usually necessary to demonstrate general
evidence of a prior commitment to make the gifts, or a settled pattern of expenditure.
While there are no details of income, both Stuart and Rebecca are wealthy in their own right, and are likely to earn reasonable
sums from their investments. They should therefore be able to satisfy the conditions on that basis.
If Rebecca were to make substantial lifetime gifts, the donees would be advised to consider taking out insurance policies on
Rebecca’s life to cover the potential tax liabilities that may arise on any PETs in the event of her early death.
Tutorial note: the answer has assumed that the shares could be bought for ￡2·10, their value for IHT.

第2题：

(ii) State, giving reasons, the tax reliefs in relation to inheritance tax (IHT) and capital gains tax (CGT) which

would be available to Alasdair if he acquires the warehouse and leases it to Gallus & Co, rather than to

an unconnected tenant. (4 marks)

正确答案：
(ii) Apart from the fact that Alasdair can keep an eye on his tenant, the main advantages are twofold:
IHT: If the firm are the tenants, the property will be land and buildings used in a business carried on by a partnership
in which the donor is a partner. Thus, Alasdair will be able to claim business property relief (BPR) at a rate of 50%
so long as he remains a partner in the firm. However, this relief would not be available until Alasdair has owned
the property for at least two years from his firm taking up the tenancy.
CGT: As Alasdair is a partner in the firm using the building, it will also be a qualifying asset for the purposes of rollover
relief on any gains arising from the disposal of the property. Assuming that Alasdair acquires a replacement asset
which will be used in the trade, the gain on sale can be deferred against the tax base cost of the replacement asset.
In the event that rollover relief cannot be used, any gains on disposal will be subject to business asset taper relief.

第3题：

(b) Assuming that Thai Curry Ltd claims relief for its trading loss against total profits under s.393A ICTA 1988,calculate the company’s corporation tax liability for the year ended 30 September 2005. (10 marks)

正确答案：

第4题：

(ii) Calculate the chargeable gain arising as a consequence of Jan accepting Jumper’s offer. (4 marks)

正确答案：

第5题：

(ii) State when the inheritance tax (IHT) calculated in (i) would be payable and by whom. (2 marks)

正确答案：
(ii) Inheritance tax administration
The tax on Debbie’s estate (personalty and realty) would be paid by the personal representatives, usually an executor.
Inheritance tax is due six months from the end of the month in which death occurred (31 December 2005) or the date
on which probate is obtained (if earlier). However, an instalment option is available for certain assets, which includes
land and buildings i.e. the residence whereby the tax can be paid in 10 equal annual instalments.

第6题：

(b) Explain the capital gains tax (CGT) and inheritance tax (IHT) implications of Graeme gifting his remaining ‘T’

ordinary shares at their current value either:

(i) to his wife, Catherine; or

(ii) to his son, Barry.

Your answer should be supported by relevant calculations and clearly identify the availability and effect of

any reliefs (other than the CGT annual exemption) that might be used to reduce or defer any tax liabilities

arising. (9 marks)

正确答案：

第7题：

(b) (i) Calculate the inheritance tax (IHT) that will be payable if Debbie were to die today (8 June 2005).

Assume that no tax planning measures are taken and that there has been no change in the value of any

of the assets since David’s death. (4 marks)

正确答案：

第8题：

(i) purchased 201,000 shares in Omega plc on 3 December 2005; and

(ii) dies on 20 December 2007,

calculate the potential inheritance tax (IHT) liability which would arise if Rebecca were to die on 1 March

2008, and no further tax planning measures were taken.

Assume that all asset values remain unchanged and that the current rates of inheritance tax continue to

apply. (6 marks)

正确答案：

第9题：

measures that could be undertaken by Debbie, quantifying the savings that can be made. (7 marks)

For this question you should assume that the rates and allowances for 2004/05 apply throughout.

正确答案：
(c) Debbie survives until July 2009
Debbie should consider giving away some of her assets to her children, while ensuring that she still has enough to live on.
Such gifts would be categorised as PETs. Although Debbie will not survive seven years (at which point the gifts would fall out
of Debbie’s estate for IHT purposes), taper relief will reduce the amount chargeable to IHT. If gifts were made prior to July
2005, 40% taper relief would be available.
It is important to remember that Debbie’s annual exemptions will reduce the value of any PET when assets are gifted. Debbie
has not used her annual exemption for the last two years, and so she can gift ￡6,000 (2 x ￡3,000) in the current tax year
as well as ￡3,000 per year in future tax years. Debbie could therefore give away ￡18,000, saving tax of ￡7,200 (￡18,000
x 40%). Debbie can also make small exempt gifts of up to ￡250 per donee per year.
Debbie should consider making gifts to Allison’s children instead of Allison (using, for example, an accumulation &
maintenance trust). This would ensure that the gifts were excluded from Allison’s estate.
It does not make sense for Debbie to gift shares in Dee Limited, as these qualify for full business property relief and therefore
are not subject to IHT.
As Andrew is shortly to be married, Debbie could give up to ￡5,000 in consideration of his marriage. This would save ￡2,000
in IHT.
Expenditure out of normal income is also exempt from IHT. This is where the transferor is left with sufficient income to
maintain his/her usual standard of living. Broadly, you need to demonstrate evidence of a prior commitment, or a settled
pattern of expenditure.
If substantial gifts are made, the donees would be advised to consider taking out insurance policies on Debbie’s life to cover
the potential tax liabilities that may arise on PETs in the event of her early death.

第10题：

(b) Mabel has two objectives when making the gifts to Bruce and Padma:

(1) To pay no tax on any gift in her lifetime; and

(2) To reduce the eventual liability to inheritance tax on her death.

Advise Mabel which item to gift to Bruce and to Padma in order to satisfy her objectives. Give reasons for

your advice.

Your advice should include a computation of the inheritance tax saved as a result of the two gifts, on the

assumption that Mabel dies on 30 June 2011. (10 marks)

正确答案：

(b) Calculate the inheritance tax (IHT) liability arising as a result of Christopher’s death. (11 marks)

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