Inheritance Tax

Section A: Objective Test David owned 6,000 shares (a 60% holding) in a private limited company. The shares were valued at £50 each for a 60% holding, £30 each for a 45% holding, and £20 each for a 15% holding. David gifted 1,500 shares to his daughter. What is the transfer of value for Inheritance Tax (IHT) purposes using the diminution in value principle?

Section A: Objective Test Beatrice died on 10 May 2023. Her estate included an asset inherited from her brother, who died on 15 August 2021. Her brother's estate paid IHT of £40,000 on this specific asset. What percentage of Quick Succession Relief (QSR) will be applied to reduce the IHT payable on Beatrice's estate regarding this asset?

Section B: Case 2 - Eleanor Vance Scenario: Eleanor Vance, a wealthy agricultural landowner, made several lifetime transfers before her death on 12 November 2023. On 15 August 2021, she transferred £450,000 of cash into a discretionary trust. Eleanor paid the lifetime Inheritance Tax (IHT) arising on this transfer. She had made no previous lifetime gifts. Question: What was the lifetime IHT payable by Eleanor on the creation of the discretionary trust in August 2021? (Assume the nil rate band is £325,000 and the annual exemptions for 21/22 and 20/21 are available).

Section B: Case 2 - Eleanor Vance Scenario: Eleanor Vance, a wealthy agricultural landowner, made several lifetime transfers before her death on 12 November 2023. On 15 August 2021, she transferred £450,000 of cash into a discretionary trust. Eleanor paid the lifetime Inheritance Tax (IHT) arising on this transfer. She had made no previous lifetime gifts. Question: At her death, Eleanor owned a farmhouse and surrounding farmland. She had lived in the farmhouse and actively farmed the land herself for 18 months prior to her death. Before that, she had rented the land and farmhouse to a tenant farmer for 6 years. Does the agricultural property qualify for Agricultural Property Relief (APR) on her death?

Section B: Case 2 - Eleanor Vance Scenario: Eleanor Vance, a wealthy agricultural landowner, made several lifetime transfers before her death on 12 November 2023. On 15 August 2021, she transferred £450,000 of cash into a discretionary trust. Eleanor paid the lifetime Inheritance Tax (IHT) arising on this transfer. She had made no previous lifetime gifts. Question: On 10 May 2022, Eleanor gave her son a cash gift of £100,000. How is this gift treated for IHT purposes upon Eleanor's death in November 2023?

Section B: Case 2 - Eleanor Vance Scenario: Eleanor Vance, a wealthy agricultural landowner, made several lifetime transfers before her death on 12 November 2023. On 15 August 2021, she transferred £450,000 of cash into a discretionary trust. Eleanor paid the lifetime Inheritance Tax (IHT) arising on this transfer. She had made no previous lifetime gifts. Question: Eleanor's estate at death was valued at £1.8 million. She left her entire estate to her children. In 2020, she had sold a large main residence (valued at £600,000) and moved into the smaller farmhouse (valued at £250,000). Assuming all conditions are met, what is the maximum Residence Nil Rate Band (RNRB) available to her estate for 2023/24?

Section B: Case 2 - Eleanor Vance Scenario: Eleanor Vance, a wealthy agricultural landowner, made several lifetime transfers before her death on 12 November 2023. On 15 August 2021, she transferred £450,000 of cash into a discretionary trust. Eleanor paid the lifetime Inheritance Tax (IHT) arising on this transfer. She had made no previous lifetime gifts. Question: By what date must the IHT on Eleanor's death estate be paid to HMRC to avoid interest charges?

Section A Mr. Vance owned 600 shares (a 60% holding) in a private unquoted company. The value of a 60% holding is £50 per share. He gifted 200 shares to his daughter. Following the gift, he retained 400 shares (a 40% holding). The value of a 40% holding is £20 per share. The value of a 20% holding (the gifted shares) as a standalone block is £15 per share. What is the transfer of value for Inheritance Tax (IHT) purposes?

Section A Which of the following statements regarding Inheritance Tax (IHT) Quick Succession Relief (QSR) is correct?

Section B - Case 3 (Oakfield Farms) Arthur owned Oakfield Farms. He died in November 2023. He had owned the agricultural land for 5 years. For the first 3 years, he rented it out to a local farmer. For the last 2 years before his death, Arthur farmed the land himself. Does the agricultural land qualify for Agricultural Property Relief (APR) for Inheritance Tax purposes?

Section B - Case 3 (Oakfield Farms) Four years before his death, Arthur transferred £400,000 cash into a discretionary trust. He had made no previous lifetime gifts. Arthur paid the lifetime Inheritance Tax arising on this transfer. Assuming the nil rate band is £325,000, what was the lifetime IHT liability paid by Arthur?

Section B - Case 3 (Oakfield Farms) Arthur also made a Potentially Exempt Transfer (PET) of £100,000 to his nephew 4 years and 2 months before his death. What percentage of taper relief will apply to the IHT payable on this PET as a result of Arthur's death?

Section B - Case 3 (Oakfield Farms) Arthur's estate on death was valued at £1.8 million. He left his entire estate to his children. He had downsized from a large family home to a smaller cottage two years before his death, freeing up cash. Can Arthur's estate claim the Residence Nil Rate Band (RNRB) downsizing addition?

Section A On 15 August 2023, George gifted a vintage tractor worth £12,000 to his nephew. George had made no other lifetime gifts. What is the value of the Potentially Exempt Transfer (PET) for Inheritance Tax purposes after applying all available exemptions?

Section A Helena owned 60% of the unquoted shares in 'Robo-Assist Ltd', a boutique robotics firm. She gifted a 15% holding to her daughter. Before the gift, her 60% holding was valued at £300,000. After the gift, her remaining 45% holding was valued at £180,000. The 15% holding itself is valued at £50,000 as a standalone minority interest. What is the transfer of value for Inheritance Tax purposes before any exemptions?

Section B - Case 3: Heritage Restorations Arthur, the founder of 'Heritage Restorations' (a VAT registered sole trader business restoring classic cars), died on 15 November 2023. His estate included 100% of the unquoted shares in a separate trading company, 'Vintage Parts Ltd', valued at £400,000. He had owned these shares for 5 years. His estate also included a classic car collection valued at £250,000, and his main residence valued at £600,000 (left to his son). What is the rate of Business Property Relief (BPR) available on the unquoted shares in 'Vintage Parts Ltd'?

Section B - Case 3: Heritage Restorations Arthur, the founder of 'Heritage Restorations' (a VAT registered sole trader business restoring classic cars), died on 15 November 2023. His estate included 100% of the unquoted shares in a separate trading company, 'Vintage Parts Ltd', valued at £400,000. He had owned these shares for 5 years. His estate also included a classic car collection valued at £250,000, and his main residence valued at £600,000 (left to his son). Assuming Arthur's wife died 10 years ago and used none of her Nil Rate Band (NRB) or Residence Nil Rate Band (RNRB), what is the maximum total tax-free amount (NRB + RNRB) available to Arthur's estate? (Assume standard 2023/24 rates: NRB £325,000, RNRB £175,000).

Section B - Case 3: Heritage Restorations Arthur, the founder of 'Heritage Restorations' (a VAT registered sole trader business restoring classic cars), died on 15 November 2023. His estate included 100% of the unquoted shares in a separate trading company, 'Vintage Parts Ltd', valued at £400,000. He had owned these shares for 5 years. His estate also included a classic car collection valued at £250,000, and his main residence valued at £600,000 (left to his son). If any Inheritance Tax is due on the unquoted shares in 'Vintage Parts Ltd' (assuming BPR was not available for some reason), how can the executors choose to pay this tax?

Section A Five years ago, Clara made a Potentially Exempt Transfer (PET) of shares in an unquoted trading company to her son, valued at £400,000. Clara died this year. At the date of her death, the shares had fallen in value to £250,000. Her son still owned the shares. Assuming no exemptions apply, what value is used for the PET in Clara's death estate calculation?

Section A David inherited £200,000 from his sister, Sarah, who died 3 years ago. Sarah's estate paid IHT at 40% on this legacy. David has now died. His estate is subject to IHT. What percentage of the IHT paid by Sarah's estate on the £200,000 can David's estate claim as Quick Succession Relief (QSR)?

Section B - Case 2: Bramble Farms Arthur owns Bramble Farms, a working agricultural estate. He decides to gift the entire estate to his daughter, Beatrice, during his lifetime. The estate includes agricultural land, a farmhouse occupied by Arthur, and various farm machinery. For Inheritance Tax (IHT) purposes, what condition must the farmhouse meet to qualify for Agricultural Property Relief (APR)?

Section B - Case 2: Bramble Farms Arthur owns Bramble Farms, a working agricultural estate. He decides to gift the entire estate to his daughter, Beatrice, during his lifetime. The estate includes agricultural land, a farmhouse occupied by Arthur, and various farm machinery. The agricultural land has an agricultural value of £800,000 and a market value (due to development potential) of £1,200,000. Assuming Arthur has owned and farmed the land for 10 years, how is relief applied to the £1,200,000 value for IHT?

Section B - Case 2: Bramble Farms Arthur owns Bramble Farms, a working agricultural estate. He decides to gift the entire estate to his daughter, Beatrice, during his lifetime. The estate includes agricultural land, a farmhouse occupied by Arthur, and various farm machinery. Instead of gifting to Beatrice directly, suppose Arthur gifted the farm machinery into a discretionary trust. The value of the transfer (after all reliefs and exemptions) exceeds his nil rate band. Who is primarily liable to pay the lifetime IHT on this Chargeable Lifetime Transfer (CLT), and at what rate, assuming Arthur pays the tax?

Section B - Case 2: Bramble Farms Arthur owns Bramble Farms, a working agricultural estate. He decides to gift the entire estate to his daughter, Beatrice, during his lifetime. The estate includes agricultural land, a farmhouse occupied by Arthur, and various farm machinery. If IHT becomes payable on the agricultural land due to Arthur's death within 7 years of the gift, Beatrice can elect to pay the IHT in annual installments. Over how many years can these installments be spread?

Section A: Objective Test On 1 August 2023, David transferred shares valued at £400,000 into a discretionary trust. He had not made any previous lifetime gifts. The trust agreed to pay any Inheritance Tax (IHT) arising from the transfer. What is the lifetime IHT liability arising on this transfer?

Section A: Objective Test Beatrice died on 10 May 2023. She had inherited an estate from her brother, Charles, who died on 15 August 2020. Charles's estate paid IHT of £40,000 on the assets transferred to Beatrice. What percentage of Quick Succession Relief (QSR) will be applied to Beatrice's estate regarding this inheritance?

Section B: Case 2 - Arthur Pendelton's Estate Scenario: Arthur Pendelton died on 15 February 2024. He owned a working farm, 'Oakwood Farm', which he had actively farmed himself for the last 15 years. The farm consists of agricultural land, a farmhouse where Arthur lived, and two farm cottages occupied rent-free by his farm workers. Question: Which of the assets comprising Oakwood Farm will qualify for Agricultural Property Relief (APR) at 100%?

Section B: Case 2 - Arthur Pendelton's Estate Scenario: Arthur Pendelton died on 15 February 2024. He owned a working farm, 'Oakwood Farm', which he had actively farmed himself for the last 15 years. The farm consists of agricultural land, a farmhouse where Arthur lived, and two farm cottages occupied rent-free by his farm workers. Question: Arthur also owned 15% of the unquoted ordinary share capital in 'AgriSupplies Ltd', a trading company that supplies farming equipment. He had owned these shares for 4 years. Do these shares qualify for Business Property Relief (BPR), and if so, at what rate?

Section B: Case 2 - Arthur Pendelton's Estate Scenario: Arthur Pendelton died on 15 February 2024. He owned a working farm, 'Oakwood Farm', which he had actively farmed himself for the last 15 years. The farm consists of agricultural land, a farmhouse where Arthur lived, and two farm cottages occupied rent-free by his farm workers. Question: Arthur's wife, Martha, died in 2010. At her death, the Nil Rate Band (NRB) was £325,000. She left £130,000 to their children and the rest of her estate to Arthur. What amount of NRB is available to Arthur's estate (excluding any Residence Nil Rate Band)?

Section B: Case 2 - Arthur Pendelton's Estate Scenario: Arthur Pendelton died on 15 February 2024. He owned a working farm, 'Oakwood Farm', which he had actively farmed himself for the last 15 years. The farm consists of agricultural land, a farmhouse where Arthur lived, and two farm cottages occupied rent-free by his farm workers. Question: Arthur left his main residence (valued at £400,000) to his direct descendants. His total estate before exemptions and reliefs was valued at £2,300,000. What is the amount of Residence Nil Rate Band (RNRB) available to Arthur's estate for the 2023/24 tax year? (Assume no transferable RNRB from his late wife).

Section B: Case 2 - Arthur Pendelton's Estate Scenario: Arthur Pendelton died on 15 February 2024. He owned a working farm, 'Oakwood Farm', which he had actively farmed himself for the last 15 years. The farm consists of agricultural land, a farmhouse where Arthur lived, and two farm cottages occupied rent-free by his farm workers. Question: Arthur's estate includes an investment property that does not qualify for any reliefs. The executors wish to pay the IHT attributable to this property in annual installments. Over how many years can these installments be spread, and when is the first installment due?

On 1 May 2023, David transferred £150,000 into a discretionary trust. He had made no previous lifetime gifts. What is the immediate Inheritance Tax (IHT) liability on this transfer?

Sarah owned 60% of the shares in a family company, valuing her holding at £600,000. She gifted 15% of the shares to her son. A 45% holding is valued at £350,000, and a 15% holding is valued at £100,000. What is the value of the transfer for IHT purposes?

SCENARIO: Arthur, aged 65, has run GreenMeadows Farm as a sole trader for 30 years. On 1 May 2023, he sold a barn used for storage for £150,000, realizing a gain of £80,000. He immediately reinvested £100,000 into a new combine harvester. On 1 June 2023, he gifted 10,000 unquoted shares in a farming supply company to his daughter, generating a chargeable gain of £40,000. Arthur sadly passed away on 1 December 2023. His estate included the farmhouse, which he occupied for agricultural purposes. QUESTION: To qualify for Agricultural Property Relief (APR) at 100%, how long must Arthur have occupied the farmhouse for agricultural purposes before his death?

SCENARIO: Arthur, aged 65, has run GreenMeadows Farm as a sole trader for 30 years. On 1 May 2023, he sold a barn used for storage for £150,000, realizing a gain of £80,000. He immediately reinvested £100,000 into a new combine harvester. On 1 June 2023, he gifted 10,000 unquoted shares in a farming supply company to his daughter, generating a chargeable gain of £40,000. Arthur sadly passed away on 1 December 2023. His estate included the farmhouse, which he occupied for agricultural purposes. QUESTION: If Arthur had inherited £50,000 from his brother who died 3 years prior to Arthur's death, what percentage of Quick Succession Relief (QSR) would apply to the tax paid on that inheritance?