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ACCA Strategic Professional · Advanced Taxation (UK) · Inheritance tax: the use of exemptions and reliefs in deferring and minimising inheritance tax liabilities

Which asset type qualifies for payment of IHT by ten equal annual instalments where the tax arises on a lifetime chargeable transfer and the donee bears the tax?

Unquoted shares that gave the donor control qualify for instalments when the donee bears the tax and still holds them. Cash, gilts and small quoted holdings do not qualify, because instalments are limited to land, buildings and certain unquoted business shares.

  1. AQuoted portfolio of gilts
  2. BCash held on deposit
  3. CUnquoted shares giving the donor control, where the shares are retained by the doneeCorrect
  4. DA holding of quoted shares of under 5%

Explanation

Instalment treatment is available for land and buildings, unquoted shares that give control, and certain other unquoted shares, and for business interests. For lifetime transfers it applies only where the donee bears the tax and still owns the asset. Cash, gilts and quoted minority shareholdings do not qualify.

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