Inheritance tax questions are like puzzles waiting to be solved, often presenting scenarios involving lifetime gifts, death estates, and the intricate dance between IHT and CGT implications. One captivating area that could steal the spotlight in the upcoming Advanced Tax exam is the death estate.

Picture this: You’re tasked with assembling all assets into the death estate, meticulously subtracting any agricultural property relief on farms (a generous 100%) and business property relief (also a sweet 100%) on unquoted shares. But here’s where the plot thickens—assets typically exempt from capital gains tax, such as cars and cash, suddenly become taxable for inheritance tax. It’s like discovering hidden treasure only to realize it’s booby-trapped!

Ah, but fear not! There are tricks of the trade to master. When it comes to the main residence, you can deduct any repayment or interest-only mortgage, but alas, no relief is granted for an endowment mortgage. And for our UK domiciled clients, brace yourselves—tax extends its reach to their worldwide assets. But wait, there’s a glimmer of hope! If an overseas property is sold, a dash of relief in the form of 5% admin expenses can be sprinkled in.

Now, let’s talk legacies. Amidst the sea of taxable assets, there are three noble exemptions that stand tall: spouses, charities, and even political parties get a free pass. And if the main residence finds its way into the hands of a direct descendant, a handsome £175,000 residence nil rate band awaits, before dipping into the normal nil rate band.

But hold on tight! Part of the £325,000 nil rate band may have been nibbled away by lifetime transfers, leaving you with less than you bargained for. Enter the charitable clause: Gift a slice of the estate to charity, and watch as the tax rate shrinks from 40% to a mere 36%. It’s a tax-saving superhero swooping in to save the day!

But what about assets taxed twice in the last 5 years? Fear not, for quick succession relief swoops in to right that wrong, scaling down the tax burden year by year like a valiant knight vanquishing foes. And let’s not forget our overseas assets—they too have suffered the taxman’s blow. But fret not! Double tax relief comes to the rescue, offering solace based on the lower of UK tax and overseas tax, with or without a treaty.

And so, the saga concludes with a reminder: Executors or personal representatives have six months after the month of death to settle the tax tab. But for those with installment property, fear not the burden, for tax payments can be spread across ten annual installments, offering a lifeline in times of financial turbulence.

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