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The Technical Quiz – April 05 (IHT planning)

To help you to keep up with the fundamentals of tax, retirement and financial planning, try answering these five questions.


George’s grandson Bill is getting married. How much can George give Bill on the occasion of his marriage without the gift counting for inheritance tax?

A) £2,500

B) £3,000

C) £3,250

D) £5,000


John gave his son Mark a holiday home. Which of the following would constitute a gift with reservation of benefit?

A) John makes occasional short visits

B) John occupies the property for 5 weeks a year but pays a market rent

C) Mark allows John’s sister to occupy the property for 3 weeks a year rent-free

D) Mark lets John live in the property rent-free for two years before he dies


Martha makes a gift of £331,000 into a disc-retionary trust. She has not made any gifts in the previous seven years, and therefore has not used her annual exemptions. What inheritance tax liability (if any) arises as a result of this gift?

A) None

B) £400

C) £1,000

D) £2,000


A discretionary trust may be subject to inheritance tax on which event?

A) The settlor’s death more than seven years after creating the trust

B) The seventh anniversary of the trust

C) The payment of income to a beneficiary

D) The payment of capital to a beneficiary


The main inheritance tax benefit of a gift and loan or loan-only scheme is that:

A) The loan is outside of the settlor’s estate for IHT purposes while it remains outstanding

B) The settlor can have access to the whole of the trust fund at any time

C) Growth on the trust fund accrues outside of the lender’s estate

D) The value of the transfer is subject to a discount if the settlor dies in the first seven years from the start of the scheme

Questions supplied by Technical Connection

Answers: A, D, A, D, C


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There is one comment at the moment, we would love to hear your opinion too.

  1. For Qu 4 is not answer A also relevant where a previous gift into a discretionary trust could have been made within the previous 7 years which then makes the term up to 14 years ? I was under the impression that the 7 year rule only applies to PETs not Discretionary Gifts ?

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