问答题
Crusoe has contacted you following the death of his father, Noland. Crusoe has inherited the whole of his father's estate
and is seeking advice on his father's capital gains tax position and the payment of inheritance tax following his death.
The following information has been extracted from client files and from telephone conversations with Crusoe.
Noland - personal information:
· Divorcee whose only other relatives are his sister, Avril, and two grandchildren.
· Died suddenly on 1 October 2012 without having made a will.
· Under the laws of intestacy, the whole of his estate passes to Crusoe.
Noland - income tax and capital gains tax:
· Sales of quoted shares resulted in:
· Chargeable gains of ￡7,100 and allowable losses of ￡16,800 in the tax year 2012/13.
· Chargeable gains of approximately ￡14,000 each tax year from 2005/06 to 2011/12.
· Noland had taxable income of between ￡15,000 and ￡20,000 each tax year.
Noland - gifts made during lifetime:
· On 1 December 2004 Noland gave his house to Crusoe.
· Crusoe has allowed Noland to continue living in the house and has charged him rent of ￡120 per month
since 1 December 2004. The market rent for the house would be ￡740 per month.
· The house was worth ￡240,000 at the time of the gift and ￡310,000 on 1 October 2012.
· On 1 November 2008 Noland transferred quoted shares worth ￡326,000 to a discretionary trust for the
benefit of his grandchildren.
Noland - probate values of assets held at death:
￡
Portfolio of quoted shares 370,000
Shares in Kurb Ltd 38,400
Chattels and cash 22,300
Domestic liabilities including income tax payable (1,506)
· It should be assumed that these values will not change for the foreseeable future.
Kurb Ltd:
· Unquoted trading company
· Noland purchased the shares on 1 December 2010.
Crusoe:
· Long-standing personal tax client of your firm.
· Married with two young children.
· Successful investment banker with very high net worth.
· Has taxable income in excess of ￡150,000 per tax year
· Intends to gift the portfolio of quoted shares inherited from Noland to his aunt, Avril, who has very little
personal wealth.
Required
(a) Prepare explanatory notes together with relevant supporting calculations in order to quantify the tax relief
potentially available in respect of Noland's capital losses realised in 2012/13.
(b) State the immediate tax implications of the proposed gift of the share portfolio to Avril and identify an
alternative strategy that would achieve Crusoe's objectives whilst avoiding a possible tax liability in the
future. State any deadline(s) in connection with your proposed strategy.
(c) On the assumption that the administrators of Noland's estate will sell quoted shares in order to fund the
inheritance tax due as a result of his death, calculate the value of the quoted shares that will be available to transfer
to Avril. You should include brief notes of your treatment of the house and the shares in Kurb Ltd.
Note: you should assume that the tax rates and allowances for the tax year 2011/12 apply throughout this question
apart from the nil rate band for inheritance tax in 2008/09.
and is seeking advice on his father's capital gains tax position and the payment of inheritance tax following his death.
The following information has been extracted from client files and from telephone conversations with Crusoe.
Noland - personal information:
· Divorcee whose only other relatives are his sister, Avril, and two grandchildren.
· Died suddenly on 1 October 2012 without having made a will.
· Under the laws of intestacy, the whole of his estate passes to Crusoe.
Noland - income tax and capital gains tax:
· Sales of quoted shares resulted in:
· Chargeable gains of ￡7,100 and allowable losses of ￡16,800 in the tax year 2012/13.
· Chargeable gains of approximately ￡14,000 each tax year from 2005/06 to 2011/12.
· Noland had taxable income of between ￡15,000 and ￡20,000 each tax year.
Noland - gifts made during lifetime:
· On 1 December 2004 Noland gave his house to Crusoe.
· Crusoe has allowed Noland to continue living in the house and has charged him rent of ￡120 per month
since 1 December 2004. The market rent for the house would be ￡740 per month.
· The house was worth ￡240,000 at the time of the gift and ￡310,000 on 1 October 2012.
· On 1 November 2008 Noland transferred quoted shares worth ￡326,000 to a discretionary trust for the
benefit of his grandchildren.
Noland - probate values of assets held at death:
￡
Portfolio of quoted shares 370,000
Shares in Kurb Ltd 38,400
Chattels and cash 22,300
Domestic liabilities including income tax payable (1,506)
· It should be assumed that these values will not change for the foreseeable future.
Kurb Ltd:
· Unquoted trading company
· Noland purchased the shares on 1 December 2010.
Crusoe:
· Long-standing personal tax client of your firm.
· Married with two young children.
· Successful investment banker with very high net worth.
· Has taxable income in excess of ￡150,000 per tax year
· Intends to gift the portfolio of quoted shares inherited from Noland to his aunt, Avril, who has very little
personal wealth.
Required
(a) Prepare explanatory notes together with relevant supporting calculations in order to quantify the tax relief
potentially available in respect of Noland's capital losses realised in 2012/13.
(b) State the immediate tax implications of the proposed gift of the share portfolio to Avril and identify an
alternative strategy that would achieve Crusoe's objectives whilst avoiding a possible tax liability in the
future. State any deadline(s) in connection with your proposed strategy.
(c) On the assumption that the administrators of Noland's estate will sell quoted shares in order to fund the
inheritance tax due as a result of his death, calculate the value of the quoted shares that will be available to transfer
to Avril. You should include brief notes of your treatment of the house and the shares in Kurb Ltd.
Note: you should assume that the tax rates and allowances for the tax year 2011/12 apply throughout this question
apart from the nil rate band for inheritance tax in 2008/09.
【正确答案】Text references. Losses for capital gains tax are dealt with in Chapter 11. Inheritance tax is covered in Chapters 17
and 18. Stamp duty is covered in Chapter 19.
Top tips. In part (a) you were asked to compute the tax relief on the capital losses. You should then have realised
that this amount was also an asset of the death estate and so affected the computation in part (b).
Easy marks. The calculation of inheritance tax on the death estate was straightforward. You should also have made
sure you obtained the easy mark for the time limit for the variation.
Examiner's comments. Part (a) was done well by many candidates. Those who did not perform well were either
not aware of the ability to carry back capital losses arising in the year of death or lacked precision in their
application of the rules.
Part (b) required candidates to identify the immediate tax implications of a gift of shares. Answers to this part were
relatively disappointing given the simplicity of the situation. It was particularly surprising to note how few
candidates recognised that there would be no capital gain as the deemed proceeds would be equal to the donor's
base cost. In addition, the word 'immediate' in the requirement meant that candidates should only have concerned
themselves with what was going to happen now as opposed to what would happen in the future.
Part (c) was the easiest part of the question and rewarded those who got to the end of the question with sufficient
time remaining. It was done well by many candidates. Common errors included the treatment of the chargeable
lifetime transfer and the availability of business property relief in respect of the unquoted shares.
(a) The potential tax relief available in respect of the capital losses realised in 2012/13
The capital losses must first be offset against the chargeable gains of ￡7,100 in 2012/13. This will not save
any capital gains tax as the gains would have been relieved by the annual exempt amount.
The remaining capital losses of ￡9,700 (￡16,800 - ￡7,100) may be offset against the chargeable gaits of the
previous three years on a last in, first out basis. The losses will reduce the chargeable gains of each year
down to the level of the annual exempt amount. The personal representatives of Noland's estate will receive
a refund of capital gains tax calculated as follows:
Losses used Tax relief
￡ ￡
Net loss 9,700
Less: used 2011/12 ￡(14,000 - 10,600) (3,400) × 18% 612
used 2010/11 ￡(14,000 - 10,600) (3,400) × 18% 612
used 2009/10 (balance) (2,900) × 18% 522
Loss unused 0
Total tax refund 1,746
(b) Gift of the share portfolio to Avril
Inheritance tax
The gift would be a potentially exempt transfer at market value. No inheritance tax would be due at the time
of the gift. However, if Crusoe were to die within seven years of making the transfer, the transfer would
become chargeable.
Capital gains tax
The gift would be a disposal by Crusoe deemed to be made at market value for the purposes of capital gains
tax. No gain would arise as the deemed proceeds will equal Crusoe's base cost of probate value.
Stamp duty
There is an exemption from stamp duty on a transfer of shares for no consideration.
Strategy to avoid a possible tax liability in the future
Crusoe should make a written variation which states that Noland should be treated as making a will giving
the shares to Avril.
The variation should contain a statement that it is to have effect for inheritance tax. The making of the
variation would then not be a transfer of value for Crusoe and so would not affect his inheritance tax position
if he dies within seven years. There is no additional inheritance payable as the estate is fully chargeable.
The deed of variation must be entered into by 1 October 2014, ie within two years of the date of Noland's death.
(c) Death estate
￡
Quoted shares 370,000
House- Gift with reservation (N1) 310,000
Shares in Kurb Ltd (N2) 38,400
Chattels and cash 22,300
Capital gains tax refund due 1,746
Less: liabilities due (1,506)
Chargeable estate 740,940
￡
Nil rate band at death 325,000
Less: chargeable lifetime transfer (W) (322,000)
Available nil rate band 3,000
Inheritance tax on death estate
￡3,000 × 0% 0
￡737,940 × 40% 295,176
￡740,940 295,176
inheritance tax payable by administrators (N3)
171,678
Value that can be transferred ￡(370,000 - 171,678) 198,322
Working
Chargeable lifetime transfer 1 November 2008
￡ ￡
Gift 326,000
Less: AE 2008/09 (3,000)
AE 2007/08 b/f (3,000)
320,000
Less: nil rate band 312,000
Less: chargeable transfers in previous 7 years (0)
(312,000)
8,000
Tax @
and 18. Stamp duty is covered in Chapter 19.
Top tips. In part (a) you were asked to compute the tax relief on the capital losses. You should then have realised
that this amount was also an asset of the death estate and so affected the computation in part (b).
Easy marks. The calculation of inheritance tax on the death estate was straightforward. You should also have made
sure you obtained the easy mark for the time limit for the variation.
Examiner's comments. Part (a) was done well by many candidates. Those who did not perform well were either
not aware of the ability to carry back capital losses arising in the year of death or lacked precision in their
application of the rules.
Part (b) required candidates to identify the immediate tax implications of a gift of shares. Answers to this part were
relatively disappointing given the simplicity of the situation. It was particularly surprising to note how few
candidates recognised that there would be no capital gain as the deemed proceeds would be equal to the donor's
base cost. In addition, the word 'immediate' in the requirement meant that candidates should only have concerned
themselves with what was going to happen now as opposed to what would happen in the future.
Part (c) was the easiest part of the question and rewarded those who got to the end of the question with sufficient
time remaining. It was done well by many candidates. Common errors included the treatment of the chargeable
lifetime transfer and the availability of business property relief in respect of the unquoted shares.
(a) The potential tax relief available in respect of the capital losses realised in 2012/13
The capital losses must first be offset against the chargeable gains of ￡7,100 in 2012/13. This will not save
any capital gains tax as the gains would have been relieved by the annual exempt amount.
The remaining capital losses of ￡9,700 (￡16,800 - ￡7,100) may be offset against the chargeable gaits of the
previous three years on a last in, first out basis. The losses will reduce the chargeable gains of each year
down to the level of the annual exempt amount. The personal representatives of Noland's estate will receive
a refund of capital gains tax calculated as follows:
Losses used Tax relief
￡ ￡
Net loss 9,700
Less: used 2011/12 ￡(14,000 - 10,600) (3,400) × 18% 612
used 2010/11 ￡(14,000 - 10,600) (3,400) × 18% 612
used 2009/10 (balance) (2,900) × 18% 522
Loss unused 0
Total tax refund 1,746
(b) Gift of the share portfolio to Avril
Inheritance tax
The gift would be a potentially exempt transfer at market value. No inheritance tax would be due at the time
of the gift. However, if Crusoe were to die within seven years of making the transfer, the transfer would
become chargeable.
Capital gains tax
The gift would be a disposal by Crusoe deemed to be made at market value for the purposes of capital gains
tax. No gain would arise as the deemed proceeds will equal Crusoe's base cost of probate value.
Stamp duty
There is an exemption from stamp duty on a transfer of shares for no consideration.
Strategy to avoid a possible tax liability in the future
Crusoe should make a written variation which states that Noland should be treated as making a will giving
the shares to Avril.
The variation should contain a statement that it is to have effect for inheritance tax. The making of the
variation would then not be a transfer of value for Crusoe and so would not affect his inheritance tax position
if he dies within seven years. There is no additional inheritance payable as the estate is fully chargeable.
The deed of variation must be entered into by 1 October 2014, ie within two years of the date of Noland's death.
(c) Death estate
￡
Quoted shares 370,000
House- Gift with reservation (N1) 310,000
Shares in Kurb Ltd (N2) 38,400
Chattels and cash 22,300
Capital gains tax refund due 1,746
Less: liabilities due (1,506)
Chargeable estate 740,940
￡
Nil rate band at death 325,000
Less: chargeable lifetime transfer (W) (322,000)
Available nil rate band 3,000
Inheritance tax on death estate
￡3,000 × 0% 0
￡737,940 × 40% 295,176
￡740,940 295,176
inheritance tax payable by administrators (N3)
171,678Value that can be transferred ￡(370,000 - 171,678) 198,322
Working
Chargeable lifetime transfer 1 November 2008
￡ ￡
Gift 326,000
Less: AE 2008/09 (3,000)
AE 2007/08 b/f (3,000)
320,000
Less: nil rate band 312,000
Less: chargeable transfers in previous 7 years (0)
(312,000)
8,000
Tax @
【答案解析】