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Inheritance Tax GlossaryAssets - The things you own - property, personal possessions, savings and investments. Capital Gains Tax (CGT) - a tax on gains arising from the disposal of assets. The tax is levied on the total of all chargeable gains after the deduction of allowable losses and allowances. Chargeable Lifetime Transfers/Gifts - these are transfers which are neither exempt nor potentially exempt. The most common chargeable transfers are those into Discretionary Trusts. A transfer will be chargeable if it (together with any cumulative transfers made within the last seven years) exceed the nil rate band. Tax is payable at 20% on the excess over the nil rate band and there will be no further tax to pay if the person making the gift survives for 7 years. If death occurs within seven years, the tax at death rates will apply to the transfer retrospectively. Credit will be given for the tax already paid. CGT - Capital Gains Tax Domicile - The country you live in for tax purposes this would normally be where your house is and where you intend to be buried. Estate - All your assets . It can also include certain gifts that you have made. Executor(s) - when someone dies, responsibility for their affairs is taken on by the people named in the deceased's will. Exemptions - things that are excluded from IHT Gift With Reservation - an asset which a person has given away but has retained a benefit in it i.e. giving a property away and still living in it IHT - Inheritance Tax Interest In Possession - the legal right to income from or enjoyment of property, as and when it arises. Joint Tenants - two or more persons who hold property as joint owners. Letters Of Administration - if a person has not made a will then you will need letters of administration to deal with the estate and not probate. Only specified people in a given order would be eligible to request letters of administration. Lifetime Transfer/Lifetime Gift - a gift made during your lifetime other than those allowed in you annual exemptions Nil rate band - the value set by the Government where, if a persons estate is valued under it, there will be no liability to Inheritance Tax. Lifetime Transfer/Lifetime Gift - a gift made during your lifetime other than those allowed in you annual exemptions PET - Potentially Exempt Transfer Potentially Exempt Transfer (PET) - transfers/gifts to individuals and certain trusts can be PET's. There is no immediate tax liability on a PET and no eventual charge as long as the person making the transfer/gift survives for seven years after making it. Probate - this is the formal process whereby an executor of a will obtains the formal documentation needed to deal with the estate of the deceased and make sure the provisions of the will are adhered to. Tax year - a tax year is from the 6th April in one year to the 5th April in the next year. Taper Relief - (applies to GCT and PETs) - When a PET is made its value will be subject to Taper Relief . If you survive 3 full years from the date of the gift, Taper Relief will reduce the amount of tax on that gift to 80% of the full death rate (40%). This Taper Relief increases each year the person survived up to a maximum of 7 years where the gift falls totally outside the estate. However if the PET fails taper relief will only be available on amounts over nil rate band Tenants In Common - two or more co-owners who hold property in undivided shares which may or may not be equal. Trust - a trust is an obligation that binds a person (the trustee) to deal with property over which he has control (the property in the trust) for the benefit of certain people (the beneficiaries). For example, if a person took out a life assurance policy in trust for his children, it would be paid to the children upon their father's death by the trustees of the policy. Because the policy was set up under a trust, it does not form part of the estate and does not have to wait for Probate to be obtained in order to pay out. The premiums for the life assurance policy would not count towards Inheritance Tax if they formed part of his annual (£3,000) gift allowance or could be seen to be paid from income without reducing there standard of living Trustees - the legal owner of property that is inside a trust. The trustee will hold the trust property for the benefit of the eventual beneficiaries. United Kingdom Resident - This site is aimed in the main at UK residents however some non-residents may well be liable to IHT Unquoted Company - This is a company that is not listed on any stock exchange 
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