Inheritance Tax  

Inheritance tax and the 14-year rule

  • Describe the 14-year IHT rule
  • Explain potentially exempt transfers
  • Identify the influence of transfers made within 14 years of death
CPD
Approx.30min

Advisers may need to do some number crunching with their clients to assess the impact of earlier gifts on future gifting plans.

The best option for the client will be influenced by a whole range of factors, including tax on the estate at death, the life expectancy of the donor at the time of making a gift, the potential tax on the gifts, the availability of "taper" relief that can reduce the tax paid on gifts made more than three years before death and the availability of nil-rate bands, including transferable values from a previously deceased spouse or civil partner. 

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All of this will require careful calculation. 

But navigating these to deliver the best possible outcome for clients is where advisers really excel. Ultimately, this is just one more opportunity to demonstrate to clients the real value of advice. 

Dave Downie is technical manager at abrdn

CPD
Approx.30min

Please answer the six multiple choice questions below in order to bank your CPD. Multiple attempts are available until all questions are correctly answered.

  1. What is the 14-year rule?

  2. A person's estate cannot benefit from unused nil-rate or RNRB from a deceased spouse, true or false?

  3. How many years after a gift has been made by the donor do they have to survive for the gift to be free of tax?

  4. What can happen to transfers made more than three years before death?

  5. How does the 14-year rule emerge?

  6. If the cumulative value of the transfers is within the available nil-rate band, then there will be no taper relief, true or false?

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You have successfully answered all the questions correctly, well done!

You should now know…

  • Describe the 14-year IHT rule
  • Explain potentially exempt transfers
  • Identify the influence of transfers made within 14 years of death

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