Professional Documents
Culture Documents
Inheritance Tax
Planning and Compliance
Requirements 2014
Mark Barrett Tax Partner, Ronan Daly Jermyn
Introduction
This wealth may have been accumulated from years of hard work
and astute financial planning or, in some situations, the luck of a
timely land disposal or exit from a business. Irrespective of how it
was generated, the changes to the capital acquisitions tax (CAT)
regime that have been introduced since 2009 have made it more
difficult to preserve this wealth when it forms part of a deceaseds
estate. At the beginning of 2009, a family of four children could
inherit an estate of 2m between them without giving rise to an
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Valuation Date
earlier or later date can arise. In any one estate, there can be
on 31 August in a particular
of grant.
78
criteria set out in s72 CATCA 2003, the primary conditions being
substantial.
Discretionary Trusts
inheritance tax. With a current tax rate of 33%, this can represent
a significant saving.
trust allows for CAT to be deferred until the assets within the trust
are distributed to the beneficiaries. To counteract the retention
of property within a trust and prevent it growing without the
imposition of a CAT charge, once-off (6%) and annual (1%) discretionary trust taxes apply.
In the early 1990s the top rate of inheritance tax was 40% and
the exempt threshold for parent/child benefits was 150,000
index-linked; therefore it was almost a financial necessity for
many families to have a s72 policy in place. As the CAT regime
became more benign, the popularity of these
predetermined value on
being deferred.
subject to 33% tax on their death, they see the attraction of taking
in a will, paying the initial and annual discretionary trust taxes, and
not attract tax if used to pay inheritance tax. In essence, they are
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Business Relief
In conclusion, I would
sound a note of caution
received by a beneficiary.