IHT400 Notes : Guide to completing your Inheritance Tax account

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Valuing a business 70 IHT400 Notes Guide to completing your Inheritance Tax account Although the Will does not talk in terms of leaving the property in trust for the husband/wife/civil partner for life, the wording is such that, for Inheritance Tax, it has the same effect. If you are dealing with the survivor’s estate and they occupied their matrimonial or civil partnership home (or a property that replaced it) under such terms, you will need to treat the survivor’s estate as if they were entitled to benefit from a trust. The same rules about trusts apply. So you need to include an interest in the house as a ‘trust’ asset and the open market value of the house (or share of the house) is the value of the trust asset. If, within seven years of their death, the survivor ceases to occupy the property, or the property is sold and not all the proceeds are reinvested in a replacement property, the survivor will be treated as making a transfer of the trust capital in which they ceased to benefit. Include that value as a gift. If you are deducting Business Relief at 100% from the value of the deceased’s business or interest in a business, there is no need to adjust the value taken from the accounts. Write this value in box 7 of Schedule IHT413 Business and partnership interests and assets. Copy this figure to the appropriate box on page 7 of form IHT400. Remember to deduct the relief using the same figure on form IHT400 at box 93. If you are not deducting Business Relief at 100% from the value of the deceased’s business or interest in a business, you will need to adjust the value taken from the accounts. You will need to adjust the value where the assets are included in the accounts at ‘book value’ or where the assets are included separately in form IHT400. Book value Book value is a company’s value as it appears on a balance sheet, equal to total assets and intangible assets such as goodwill, minus liabilities. The value of assets as they appear on a balance sheet will be equal to the cost of the assets less accumulated depreciation. Book value therefore often differs substantially from the open market value. Open market value For Inheritance Tax, the open market value of an asset is the price it might reasonably fetch if it was sold on the open market at the time of the transfer of that asset. Other than land, the assets most commonly included in business accounts at book value are business stock and goodwill. You may be including the land separately in form IHT400. If so, you will need to take that value, or the deceased’s share of it, away from the value of the deceased’s interest in the business.
Lloyd's Underwriters Valuing money IHT400 Notes Guide to completing your Inheritance Tax account If not, you will need to get open market values for land and any other assets included at book value such as stock and goodwill. If the open market value is more than the book value, add the increase in value, or the deceased’s share of that increase, to the value of the deceased’s interest in the business. If the open market value is less than the book value, deduct the decrease in value, or the deceased’s share of that decrease, from the value of the deceased’s interest in the business. Explain how you have arrived at your value for the business or interest in a business in box 9 on Schedule IHT413. If you need more space, please use the 'Additional information' box 25 on form IHT413. If the deceased was an underwriter at Lloyd's, include a value for the deceased's business as an underwriter as an interest in a business. You should include as assets of the deceased’s estate all kinds of money and debts owed to the deceased at the date of death. Examples are: • money that the deceased had lent to someone else and which had not been repaid at the date of death • money that the deceased had lent to trustees linked to a life assurance policy held in trust • money for which the deceased held a promissory note or ‘IOU’ • money that the deceased had lent to someone and that is secured by a mortgage over property • money owing to the deceased from a director’s loan account or current account with a company. What value to use Include the face value of the loan, after taking off any repayments that have been made. 71
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Guide to completing your Inheritanc
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Contents Introduction IHT400 Notes
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IHT400 Notes Guide to completing yo
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A This guide will help you fill in
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A Legitim IHT400 Notes Under Scotti
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IHT400 Notes Delivering a reduced a
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Changes to the administration of an
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IHT400 Notes What values to include
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If the deceased was domiciled in Sc
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IHT400 Notes 31 32 36 Guide to comp
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Page 25 and 26: Value of gifts Who pays the Inherit
Page 27 and 28: IHT400 Notes Gifts with reservation
Page 29 and 30: IHT400 Notes Gifts made as part of
Page 31 and 32: IHT400 Notes The other joint owner
Page 33 and 34: Registered or non-registered pensio
Page 35 and 36: IHT400 Notes Contributions to a pen
Page 37 and 38: IHT400 Notes Dividends and interest
Page 39 and 40: Traded unlisted stocks and shares U
Page 41 and 42: Rate of relief table IHT400 Notes G
Page 43 and 44: When is Agricultural Relief availab
Page 45 and 46: Agricultural Relief and lifetime tr
Page 47 and 48: IHT400 Notes What items qualify for
Page 49 and 50: Assets on which tax may or may not
Page 51 and 52: IHT400 Notes 55 56 57 62 Guide to c
Page 53 and 54: IHT400 Notes 68 69 70 Guide to comp
Page 55 and 56: Deductions from the estate incurred
Page 57 and 58: Exemptions and reliefs, page 10 IHT
Page 59 and 60: IHT400 Notes Paying Inheritance Tax
Page 61 and 62: Declaration, page 12 IHT400 Notes 1
Page 63 and 64: IHT400 Notes The Inheritance Tax on
Page 65 and 66: IHT400 Notes Applying for a grant i
Page 67 and 68: IHT400 Notes Applying for a grant i
Page 69 and 70: Payment in advance Electronic trans
Page 71 and 72: What value to use Estimating a valu
Page 73 and 74: Stock Exchange markings National Sa
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Page 79 and 80: Qualifying charities Gifts for nati
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Page 83 and 84: IHT400 feedback form 1 How much of
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IHT400 Notes : Guide to completing your Inheritance Tax account

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