BPR, APR, woodlands relief and the deduction of debt

Produced by a Tolley Trusts and Inheritance Tax expert

Trusts and Inheritance Tax

Guidance

This guidance note details the rules about the deduction of liabilities from assets which qualify for BPR, APR and woodlands relief as set out in IHTA 1984, s 162B. The rules were introduced in Finance Act 2013 to reduce tax planning around the deduction of such liabilities.

Debts owed by the deceased (for transfers on the death of an individual) will be disclosed on IHT419. HMRC will pay special attention to investigating these debts.

How liabilities are deducted for IHT purposes

When valuing an asset for IHT purposes, any liability attached to the asset is deducted from that asset when arriving at its net value. Therefore, a property which is mortgaged will be valued at the market value of the asset less the value of the liability, that is at its net value.

Before Finance Act 2013, this led to planning opportunities. A private residence worth £2m could be mortgaged to finance property qualifying for BPR. On a chargeable transfer, the mortgage would reduce the value of the private

Continue reading

To read the full Guidance note, register for a free trial of Tolley+™

TAKE A FREE TRIAL

Popular Articles

Personal Tax

Income tax losses ― overview

Income tax losses ― overviewIncome tax losses can arise due to a number of reasons, but not all losses can be relieved against total income and some losses can only be set against certain types of component income. The table below is a summary of the main reliefs for income tax losses.Summary of

04 Mar 2021 12:19 | Produced by Tolley Read more

Corporation Tax

Substantial shareholding exemption ― overview

Substantial shareholding exemption ― overviewThe substantial shareholdings exemption (SSE) provides a complete exemption from the liability to corporation tax on the gains generated from qualifying disposals of shares and interests in shares by qualifying companies. No claim is required. Provided

14 Jul 2020 13:44 | Produced by Tolley Read more

Personal Tax

Transferable tax allowance (also known as the marriage allowance)

Transferable tax allowance (also known as the marriage allowance)What is the transferable tax allowance (marriage allowance)?From 6 April 2015, an individual can elect to transfer 10% of the personal allowance (£1,260) to the spouse or civil partner where neither party is a higher rate or additional

14 Jul 2020 13:52 | Produced by Tolley Read more

��Ƶ