The Taxation of Gifts and Inheritances, Finance Act 2012
- Part 1
- Chapter 2 Definitions, Scope and Territoriality
- Chapter 3 Gift Tax
- 3.1 Introduction
- 3.2 Charge to Gift Tax
- 3.3 Taking a gift
- 3.3.1 Disposition
- 3.3.2 Beneficially entitled in possession
- 3.3.3 Otherwise than on a death
- 3.3.4 To any benefit
- 3.3.5 Otherwise than for full consideration
- 3.3.6 Appropriate part and annuities
- 3.3.7 Conditional/unenforceable gifts
- 3.4 Taxable Gift
- 3.4.1 Gifts taken where the disposition is prior to 1 December 1999
- 3.4.2 Gifts taken where the disposition is on or after 1 December 1999
- 3.4.3 Date of the disposition and date of the gift
- 3.4.4 Property situated in the State
- 3.5 Gift taken by joint tenants
- Chapter 4 Inheritance Tax
- 4.1 Introduction
- 4.2 Charge to Inheritance Tax
- 4.3 Taking an Inheritance
- 4.4 Taxable Inheritance
- 4.4.1 Inheritances taken where the disposition is prior to 1 December 1999
- 4.4.2 Inheritances taken where the disposition is on or after 1 December 1999
- 4.4.3 Date of disposition and date of inheritance
- 4.4.4 Property situated in the state
- 4.5 Disclaimers
- 4.6 Inheritance Taken by Joint Tenants
- Chapter 5 Valuation Date
- Chapter 6 Value of Property for CAT
- 6.1 Introduction
- 6.2 Market Value of Benefits
- 6.2.1 Open market
- 6.2.2 Hypothetical sale
- 6.2.3 The best price
- 6.2.4 The willing vendor and purchaser
- 6.2.5 Summary of the open market provisions
- 6.3 Value of Property for CAT
- 6.4 Valuation of Certain Property Assets
- 6.5 Share Valuation
- 6.5.1 Quoted shares
- 6.5.2 Unquoted shares and securities
- 6.5.3 Factors relevant to the valuation of unquoted shares
- 6.5.4 Methods of valuation
- 6.5.5 Size of shareholding and minority discounts
- 6.5.6 Private controlled companies
- 6.5.7 Valuation of a private controlled company
- 6.5.8 Compare the valuation for CAT with the valuation used for CGT/stamp duty
- 6.6 Practical Advice
- 6.7 Valuation of Annuities
- Chapter 7 Exemptions
- 7.1 Introduction
- 7.2 Small Gifts
- 7.3 Spouses and Civil Partners
- 7.4 Relief in Respect of Certain Policies of Insurance
- 7.5 Relief in Respect of Certain Policies of Insurance Relating to Tax Payable on Gifts
- 7.6 Exemption of Certain Policies of Insurance
- 7.7 Exemption of Specified Collective Investment Undertakings
- 7.8 Provisions Relating to Charities etc
- 7.9 Exemption of Heritage Property
- 7.10 Heritage Property of Companies
- 7.11 Exemption of Certain Inheritances Taken by a Parent
- 7.12 Payments Relating to Retirement etc
- 7.13 Exemption of Certain Securities
- 7.14 Exemption of Certain Receipts
- 7.14.1 Support, maintenance and education
- 7.14.2 Payments to minor children after the death of the disponer
- 7.14.3 Trusts for permanently incapacitated individuals
- 7.15 Disposition made by the Donee/Successor
- 7.16 Associated Companies
- 7.17 Qualifying Expenses of Incapacitated Persons
- 7.18 Retirement Benefits
- 7.19 Dwelling-house Exemption
- 7.19.1 Dwelling-house
- 7.19.2 Occupation
- 7.19.3 Ownership by disponer
- 7.19.4 No entitlement to any other dwelling-house
- 7.19.5 Remain in occupation
- 7.19.6 Clawback
- 7.19.7 Interaction with agricultural relief
- 7.19.8 Practical aspects
- 7.20 Benefits Free from Tax
- Chapter 8 Reliefs
- 8.1 Introduction
- 8.2 Agricultural Relief
- 8.2.1 Definitions
- 8.2.2 Operation of the relief
- 8.2.3 Condition regarding investing in agricultural property
- 8.2.4 Appropriation
- 8.2.5 Transferee
- 8.2.6 Clawback
- 8.2.7 Interaction with dwelling-house relief
- 8.2.8 Non-qualifying property
- 8.2.9 Interaction of agricultural relief and business relief
- 8.3 Business Relief
- 8.3.1 Relevant business property
- 8.3.2 Excluded businesses
- 8.3.3 Holding companies and groups
- 8.3.4 Minimum period of ownership
- 8.3.5 Replacement property
- 8.3.6 Excepted and excluded assets
- 8.3.7 Assessing the value
- 8.3.8 Business relief review
- 8.3.9 Clawback of relief
- 8.3.10 Interaction with agricultural relief
- 8.3.11 Comparison with agricultural relief
- 8.4 Relief from Double Aggregation
- 8.5 Allowance for Prior Tax on the Same Event
- 8.6 Allowance for Capital Gains Tax Paid on the Same Event
- 8.7 Favourite Niece/Nephew Relief
- 8.8 Surviving Spouse/Civil Partner Relief
- 8.9 Minor Child of a Deceased Child
- 8.10 Inheritances Taken by Parents
- 8.11 Certain marriage settlements
- 8.12 Benefits taken by foster children
- 8.13 Benefits received by adopted children from natural parents
- Chapter 9 Discretionary Trust Tax and Related Issues
- 9.1 Introduction
- 9.2 Definition of Discretionary Trust
- 9.3 Initial Levy on Discretionary Trusts
- 9.3.1 Charge to initial levy
- 9.3.2 Date of deemed inheritance
- 9.3.3 Territoriality
- 9.3.4 Valuation date for initial levy
- 9.3.5 Taxable value
- 9.3.6 Interests in expectancy
- 9.3.7 Avoidance of double charge
- 9.3.8 Liability to pay the initial discretionary trust tax and file a return
- 9.3.9 Exclusion of certain CATCA 2003 provisions
- 9.3.10 Exemptions
- 9.3.11 Partial refund of initial discretionary trust tax
- 9.4 Annual Levy on Discretionary Trusts
- 9.4.1 Introduction
- 9.4.2 Definitions
- 9.4.3 Charge to annual levy
- 9.4.4 Territoriality
- 9.4.5 Anti-avoidance
- 9.4.6 Interests in expectancy
- 9.4.7 Interaction of initial and annual discretionary trust levies
- 9.4.8 Valuation date for annual levy
- 9.4.9 Taxable value
- 9.4.10 Liability to pay the annual discretionary trust tax and file a return
- 9.4.11 Exclusion of certain CATCA 2003 provisions
- 9.4.12 Exemptions
- 9.4.13 Rate of annual levy
- 9.4.14 Values agreed and retained for three years
- 9.5 Imposition of Interest and Penalties for Initial and Annual Discretionary Trust Levies
- 9.5.1 Interest on late payment
- 9.5.2 Surcharge for undervaluation
- 9.5.3 Surcharge for late returns
- 9.5.4 Overpayment of tax
- 9.5.5 Penalties
- 9.6 Other Related Matters
- Chapter 10 Settlements and Limited Interests
- 10.1 Introduction
- 10.2 Discretionary Trust
- 10.2.1 CAT consequences on the establishment of a discretionary trust
- 10.2.2 Appointments from a discretionary trust
- 10.2.3 Gifts and inheritances taken from a discretionary trust – disposition prior to 1 December 1999
- 10.2.4 Gifts and inheritances taken from a discretionary trust – disposition on or after 1 December 1999
- 10.2.5 Appointment of capital or income
- 10.2.6 Appointment of a limited interest
- 10.2.7 Appointment of free use of trust assets
- 10.2.8 Reliefs available on appointment of trust assets
- 10.2.9 Appointment of trust assets free of tax
- 10.3 Settlement
- 10.3.1 Dealings with future interests
- 10.3.2 Release of limited interests
- 10.3.3 Settlement of reversionary interest
- 10.3.4 Enlargement of interests
- 10.3.5 Other taxes on transactions of settled property
- 10.3.6 Return by trustees on death of person with a limited interest
- 10.3.7 Liability to CAT on certain sales and mortgages
- 10.4 Powers of Appointment
- Chapter 11 Issues Relating to Foreign Assets and Double Taxation
- 11.1 Introduction
- 11.2 United Kingdom
- 11.2.1 Introduction
- 11.2.2 Territoriality
- 11.2.3 Domicile in the UK
- 11.2.4 The charge to IHT
- 11.2.5 Calculation of IHT
- 11.2.6 Exemptions
- 11.2.7 Reliefs from IHT
- 11.2.8 Excluded property
- 11.2.9 Deeds of variation and disclaimers
- 11.2.10 UK anti-avoidance
- 11.2.11 Payment of tax
- 11.2.12 Practical example
- 11.3 France
- 11.3.1 Introduction
- 11.3.2 Inheritance law in France
- 11.3.3 Territoriality
- 11.3.4 Inheritance tax allowance bands
- 11.3.5 Calculation of French inheritance tax
- 11.3.6 Gift tax allowance bands
- 11.3.7 Calculation of gift tax
- 11.3.8 Reliefs
- 11.3.9 Taxation of trusts
- 11.3.10 Administration
- 11.3.11 Practical example
- 11.4 Spain
- 11.4.1 Introduction
- 11.4.2 Inheritance law
- 11.4.3 Territoriality
- 11.4.4 The charge to ISD under state rules
- 11.4.5 State allowances
- 11.4.6 Gift tax
- 11.4.7 Autonomous communities reliefs
- 11.4.8 Calculation of ISD
- 11.4.9 Administration
- 11.4.10 Practical example
- 11.5 United States
- 11.5.1 Introduction
- 11.5.2 Territoriality
- 11.5.3 Domicile in the US
- 11.5.4 The charge to ET, GT & GST
- 11.5.5 Exemptions
- 11.5.6 Transfers to a spouse (ET)
- 11.5.7 Transfers to a spouse (GT)
- 11.5.8 Calculation of ET, GT & GST
- 11.5.9 Administration
- 11.5.10 Practical example
- 11.6 Double Taxation Relief
- 11.6.1 Unilateral relief
- 11.6.2 Treaty relief
- 11.6.3 Ireland–UK double tax agreement
- 11.6.4 Practical application of Ireland-UK double tax treaty
- 11.6.5 Ireland-US double taxation agreement
- 11.7 Conclusion
- Chapter 12 Probate and Administering a Deceased’s Estate
- 12.1 Introduction
- 12.2 Personal Representative
- 12.3 Devolution of the Deceased’s Assets
- 12.4 Grant of Probate or Letters of Administration
- 12.4.1 Grant of probate
- 12.4.2 Grant of letters of administration with will annexed
- 12.4.3 Grant of letters of administration
- 12.4.4 Personal application
- 12.4.5 Probate office and district probate registries
- 12.4.6 Extraction of a grant of probate
- 12.4.7 Extraction of a grant of letters of administration
- 12.5 Inland Revenue Affidavit
- 12.5.1 Completing the Inland Revenue Affidavit
- 12.5.2 Return by trustees on death of person with a limited interest
- 12.5.3 Procedures for submission of Inland Revenue Affidavit
- 12.5.4 Non-residents
- 12.5.5 Corrective affidavit
- 12.5.6 Death of personal representative during the administration of the estate
- 12.6 Requirement to Prepare Estate Accounts
- 12.7 Requirement to File Tax Returns
- 12.8 Taxation of Beneficiaries
- 12.9 Is there a Need for a Foreign Grant?
- Chapter 13 Anti-Avoidance and Miscellaneous Provisions
- 13.1 Introduction
- 13.2 Connected Gifts/Gift Splitting
- 13.3 Dispositions Enlarging the Value of Property
- 13.4 Dispositions by or to a Company
- 13.5 Arrangements Reducing the Value of Company Shares
- 13.5.1 Arrangements involving absolute interest in shares
- 13.5.2 Arrangements involving limited interest in shares
- 13.5.3 Arrangements involving the redemption of shares
- 13.6 General Anti-Avoidance
- 13.7 Mandatory Reporting of Certain Transactions
- 13.8 Revocable Gifts
- 13.9 CAT and Section 98 Succession Act 1965
- 13.10 Life Assurance
- Part 2
- Chapter 14 Returns, Pay & File, ROS, Taxable Value and Assessments
- 14.1 Introduction
- 14.2 Accountability for CAT
- 14.3 Self-assessment
- 14.3.1 Returns
- 14.3.2 Pay and file date for mainstream CAT
- 14.3.3 Obligation by a beneficiary to file a return
- 14.3.4 Obligation for a beneficiary to file a return where the benefit is exempt from CAT
- 14.3.5 Obligation for a disponer to file a return
- 14.3.6 Obligation to file a return on disposition to a discretionary trust
- 14.3.7 Expression of doubt
- 14.3.8 Signing of returns
- 14.4 Taxable Value of a Gift or Inheritance
- 14.4.1 Incumbrance-free value
- 14.4.2 Consideration
- 14.4.3 Future liabilities
- 14.4.4 Deductions not allowed
- 14.4.5 Taxable value of a limited interest
- 14.5 Contingencies Affecting Gifts or Inheritances
- 14.6 Free Use of Property
- 14.6.1 Introduction
- 14.6.2 Basis of charge
- 14.6.3 Valuation of the gift
- 14.6.4 Date of gift
- 14.6.5 Inheritance
- 14.6.6 Foreign element
- 14.6.7 Erosion of thresholds
- 14.7 Life Policies
- 14.8 Assessment of Tax
- 14.9 Computation of Tax
- 14.10 ROS Filing of Returns
- Chapter 15 Payment and Recovery of Tax, Interest, Surcharges and Penalties
- 15.1 Introduction
- 15.2 Payment of Tax and Interest
- 15.2.1 Tax
- 15.2.2 Interest
- 15.2.3 Set-off of gift tax
- 15.2.4 Payment of tax by instalments
- 15.2.5 Payment of CAT by non-statutory instalments, postponement and remission
- 15.2.6 Payment of inheritance tax by transfer of securities
- 15.2.7 Payment of inheritance tax using buy-back of shares
- 15.2.8 Payment of CAT by donation of heritage items
- 15.2.9 Payment by notice of attachment
- 15.3 Surcharges
- 15.4 Recovery of Gift and Inheritance Taxes Inter-Country
- 15.5 Overpayment of Tax
- 15.6 Penalties
- 15.6.1 Failure to submit returns
- 15.6.2 Failure to allow inspection of property
- 15.6.3 Deliberately and carelessly
- 15.6.4 Assisting or inducing
- 15.6.5 Criminal actions
- 15.6.6 Application of TCA 1997 provisions in connection with penalties
- 15.6.7 Revenue offences
- 15.6.8 Court proceedings to order the submission of a return
- 15.6.9 Publication of names of tax defaulters
- 15.7 Certificate Relating to Registration of Title
- 15.8 Money Held in Joint Accounts
- 15.8.1 Revenue clearance/consent
- 15.8.2 Penalty on banker
- 15.8.3 Non-application to spouses/civil partners
- 15.9 Court Proceedings
- 15.10 Delivery of Notices and Forms
- Chapter 16 Revenue Powers Relating to CAT and Revenue Audits
- 16.1 Introduction
- 16.2 Revenue Powers
- 16.3 Other Revenue Powers
- 16.3.1 Power to require production of accounts and books
- 16.3.2 Production of books and records – Application to High Court
- 16.3.3 Power to obtain from certain persons particulars of transactions and documents concerning tax liability of taxpayer
- 16.3.4 Information from third parties – Application to High Court
- 16.3.5 Power of inspection: life policies
- 16.3.6 Information to be furnished by financial institutions
- 16.3.7 Power of attachment
- 16.4 Revenue Audits
- 16.4.1 Introduction
- 16.4.2 Audit selection
- 16.4.3 Types of audit
- 16.4.4 Voluntary disclosure
- 16.4.5 Right of appeal
- 16.5 Appeals
- Part 3 Practical Transactions
- Transaction 1 Lifetime Transfer of a Family Company
- 1 Background
- 2 Analysis
- 2.1 Tax issues
- 2.2 Availability of business relief/retirement relief
- 2.2.3 Assessing the value for tax
- 3 Control Issues/Business Succession
- 4 Shareholders Agreement
- 4.1 Transfer of shares
- 4.2 Sale of shares
- 4.3 Pre-emption rights
- 4.4 Valuation
- 4.5 Management
- 4.6 Return for shareholders
- 5 Will Planning
- Transaction 2 Life Interest Settlement
- Transaction 3 Estate
- Transaction 4 Estate Inequality Between Children & Disclaimers
- Transaction 5 Estate of Widow
- 1 Background
- 2 Issues
- 2.1 Information gathering
- 2.2 Life-time transfers
- 2.3 Use the annual small gift exemption
- 2.4 Use of business property relief in relation to gift to Simon
- 2.5 Trust for Simon’s youngest child
- 2.6 Inheritance conditional on investment in agricultural property
- 2.7 Dwelling-house relief
- 2.8 Trust for the youngest grandchild
- 2.9 Bequests to other grandchildren
- 2.10 Tax free benefit
- 2.11 Legal advice, making her will and choosing executors/trustees
- 2.12 And finally