Introduction

Inheritance tax can severely impact what can be passed on to future generations. But with the right planning the effect of IHT can be minimised. It is therefore essential for advisers when considering wealth transfer to understand the taxation of lifetime gifts. Advisers need to fully understand the associated risks, importance of timing and options to protect existing valuable benefits before giving advice to a client in relation to moving their DC pensions.

This module is in two sections and should take around 60 minutes to complete. Once you have completed all the sections there is a short self-assessment quiz to check what you have learned and a CPD certificate for up to 60 minutes can be claimed.

Outcomes

On completion of this module you should be able to:

  1. Describe whether a transfer is exempt, potentially exempt or chargeable
  2. Explain how gifts made within seven years of death may be taxed
  3. Determine what IHT relief or exemptions may be available on lifetime gifts

Learning materials

Post learning assessment

Question 1

Which of the following is NOT an exempt transfer?

  1. A gift between UK domiciled spouses
  2. A £5,000 gift by a parent in consideration of marriage
  3. Regular gifts of surplus income
  4. A gift of £1,000,000 from a UK domiciled wife to her non-UK domiciled husband

Question 2

Which of the following statements is FALSE?

  1. Taper relief will not apply if the gift is within the nil rate band
  2. Taper relief only applies to gifts made more than 3 years before death
  3. There’s no taper relief available on chargeable life transfers (CLTs) where the donor failed to survive seven years
  4. Taper relief reduces the tax payable not the value of the gift

Question 3

Which of the following will not be allowable income for the normal expenditure out of income exemption (gifts from surplus income)?

  1. Withdrawals from an investment bond
  2. ISA income
  3. Pension drawdown income
  4. Trust income

Check your answers

Claim your certificate