ACCA TX ^UK Syllabus D. Inheritance Tax - Inheritance tax in the exam - Notes ^{1 / 1}

Below are a few points that might help jog your memory and ensure that you score well in the IHT section of the exam!

Make gifts early in life
Gifts should be made as early in life as possible so that there is a greater chance of the donor surviving for seven years.
Gifts made just before death will be of little or no IHT benefit, and may result in a capital gains tax liability (whereas transfers on death are exempt disposals for capital gains tax purposes).
Make use of the nil rate band
Gifts can be made to trusts up to the amount of the nil rate band every seven years without incurring any immediate charge to IHT.
Gifts to trusts within seven years of each other will be subject to the seven year cumulation period, whilst an immediate charge to IHT will arise if a gift exceeds the nil rate band.
Skip a generation
When making gifts either during lifetime or on death, it can be beneficial to skip a generation so that gifts are made to grandchildren rather than children. This avoids a further charge to IHT when the children die. Gifts will then only be taxed once before being inherited by the grandchildren, rather than twice.