Copy of `HMRC - UK taxation terms`

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HMRC - UK taxation terms Category: Business and Law > Tax glossary Date & country: 28/03/2012, UK Words: 221

Grantofdoubleprobate
A grant of representation where one executor does not wish to prove the will and the right to join others later is reserved. When the non-proving executor wishes to take up office later, a grant of double probate is made. Application for this is made on the form Cap A5C which is available from the Probate and IHT Helpline on 0845 3020900.

Grantofconfirmation
The proof of legal authority required by the person who is entrusted with dealing with a deceased person's estate in Scotland.

Grantofadministrationdebonisnon
Grant of representation 'concerning goods not administered'. It is used where, following a grant of representation, the personal representative dies without completing the administration of the estate.

Grantcaeterorum
A grant of representation which follows an initial grant in respect of limited property thus giving the administrator power over the remaining assets. Application for this type of grant requires the submission of a form IHT400.

Grantadcolligendabona
A grant of representation which is limited to a particular purpose and allows the administrator power to preserve the deceased's estate. For example, where part of the deceased's estate consists of perishable goods.

Grant
The term used to describe whatever type of grant of representation is taken out.

Governmentsecurities
Securities issued by the Treasury quoted on the stock exchange.

Goodwill
The value of a business over and above its book value of assets, which represents the goodwill of customers or the skill and expertise of company employees.

Giftwithresrevation
See gift with reservation of benefit.

Giftwithreservationofbenefit
A gift which is not fully given away so that the person getting the gift does so with conditions attached or the person making the gift keeps back some benefit for themselves.

Giftinconsiderationofmarriage
A gift made to a person who is about to get married or to form a civil partnership. These gifts are exempt from IHT up to the following amounts:

gift
From 22 March 2006, a chargeable gift is, broadly, any gift which is not wholly covered by exemptions and given to the trustees of a relevant property trust or to a company. Gifts from one individual to another or to a disabled person's trust are not chargeable gifts, but are potentially exempt transfers.

FOTRAGilts
'Free of Tax to Residents Abroad' gilts are securities issued by the Treasury with the condition that they, and the interest on them, are exempt from UK taxation so long as they are held beneficially by or on behalf of persons whose ordinary residence is outside the UK. This is excluded property

fotra
Some UK Government securities are issued on 'Free Of Tax to Residents Abroad' (FOTRA) terms and are exempt from UK inheritance tax where the beneficial owner of the security was not ordinarily resident in the UK.

formercivilpartner
A person whose civil partnership has been legally dissolved.

Foreigndomiciary
A type of excepted estate. Where the deceased died after 5 April 2004 and was never domiciled or deemed domiciled in the UK the estate can be treated as an excepted estate provided the UK estate consists only of cash or quoted shares not exceeding £100,000 in total.

flatrate
The inheritance tax charge on accumulation and maintenance trusts, age 18 to 25 trusts and certain other special trusts where proportionate, exit and ten-yearly charges do not apply.

FinancialServicesAuthority
The government agency that regulates investment business as required by Financial Services Act 1986.

Fallinvaluerelief
When tax, or additional tax, is payable on a gift because the donor has died and the value of a gift has fallen between the date of the gift and the date of death, then tax is usually charged on the reduced value of the gift.

Exitcharge
Also known as a proportionate charge.

Intestate
If a person dies intestate, they died without making a will, or without fully disposing of their property by will. The administration of the estate is then governed by the provisions of the Administration of Estates Act 1925. See how the rules of intestacy work.

Intestacy
An estate where the person died intestate.

Inventory
Form C1 Confirmation with inventory is the form used for a Scottish estate on which the personal representative has to provide information such as assets of the estate, including assets situated outside of Scotland.

Issue
Children or remoter issue of the deceased.

Jointassets
See joint property

Jointproperty
Something that is jointly owned by two or more people either as a 'joint tenancy' or as 'tenants in common'. Find out more about joint property in our guide to passing on your home to your children.

Jointtenancy
A form of joint ownership where all the joint owners have an identical interest in the property. On the death of one owner, their interest passes to the remaining owner(s) by survivorship.

LandsTribunal
A tribunal with the powers to determine questions relating to land. An appeal against a notice of determination in respect of the valuation of land can be heard at a lands tribunal.

Leaseforlife
A type of settled property where a lease has been granted on a property for which full consideration has not been paid by the lessee.

Lessee
A person to whom a lease is granted.

Lessor
A person who grants a lease.

Lifeinterest
A common form of interest in possession in settled property where a person has an interest for the duration of their lifetime.

Lifetenant
A person who holds a life interest in settled property.

Limitedprobate
Where an executor is appointed in respect of certain assets only, such as literary works.

Lossonsaleofland
If, within 12 months of a death, listed securities in the estate are disposed of for less than the value returned in the IHT400, the personal representatives can make a claim on form IHT38 that the total gross proceeds should replace the date of death value.

Lossonsaleofshares
If, within four years of a death, land or buildings in the estate is sold for less than the value returned in the IHT400, the personal representatives can make a claim on IHT35 that the gross sale price should be substituted for the date of death value.

Losstotheestate
The value of a gift for inheritance tax purposes is the amount of the loss to the estate. It is worked out by looking at the value of the estate before and after the gift was made. The difference between those two figures is the loss to the estate.

Lowvalueestates
A type of excepted estate where there can be no liability to inheritance tax because the total value of the estate, including the deceased's share of jointly owned assets, any specified transfers and specified exempt transfers, does not exceed the inheritance tax threshold. See our guide Inheritance Tax thresholds for information on the correct thr...

Milkquota
A producer's right to sell a fixed number of litres of milk a year without having to pay a penalty.

min
A trust for a bereaved minor is a trust which is exempt from mainstream inheritance tax charges if it is held either

moneypurchase
An arrangement is a money purchase arrangement if, at that time, all the benefits that may be provided to or in respect of the member under the arrangement are cash balance or other money purchase benefits.

movableproperty
Goods, furniture and other items which can be moved from place to place.

Nationalpurposes
Exemption from inheritance tax is given for gifts and bequests to certain national institutions such as the National Gallery. A list of qualifying bodies and other information can be found in our booklet IHT206A (PDF 105K) on page 4.

Newspapertrusts
Trusts set up for newspaper publishing companies or newspaper holding companies. These are treated like employee trusts for inheritance tax purposes.

nilrateband
The amount of an estate on which there is no inheritance tax to pay. If the value of an estate, including any assets held in trust and gifts made within seven years of death, falls within the nil-rate band there will be no IHT payable on the estate. Where the value of an estate exceeds the nil-rate band, only the amount above the nil-rate band is t...

Nominatedasset
Certain assets, such as deposits with Friendly societies, National Savings Bank accounts and National Savings Certificates, can be transferred on death direct to chosen beneficiaries by nomination.

Nominee
A person who holds property on behalf of another.

Noninstalmentoptionproperty
A phrase used in HMRC Inheritance Tax to describe property on which the instalment option may not be chosen, such as bank accounts, household and personal goods and life insurance policies.

Normalexpenditureoutofincome
Gifts which are made purely out of income as part of a person's normal expenditure are exempt from inheritance tax. The claimant must show that after allowing for the gifts the donor was left with sufficient income to maintain their usual standard of living and that there was an established pattern of giving.

Noticeofdetermination
A notice of determination may be issued where the personal representatives do not agree the value of the transfer. It is a written notice which states that the outstanding matters have been determined or payment of the outstanding tax has not been made. There is a right of appeal.

oeic
Collective investment vehicles with one price for investors. OEICs are able to issue more shares if demand increases from investors, unlike investment trusts.

Openmarketvalue
For inheritance tax, the open market value of an asset is the price it might reasonably fetch if it was sold on the open market at the time of the transfer of that asset.

Outrightgift
A gift where the donor gives away full ownership of the gift and does not retain any benefit.

Pecuniarylegacy
A gift of a sum of money under a will.

Permanenthome
The country where a person intends to live for the remainder of their life. It is the country whose laws decide, for example, whether a Will is valid, or how the estate of a person who has not made a Will is dealt with when they die.

Perstirpes
If a property is to be divided 'per stirpes' among the children of a deceased person, then each child takes an equal share. If a child has predeceased the deceased that child's children will take equally between them the share that the predeceased child would have taken.

Personalapplicant
A person who is applying for a grant of representation without the help of a solicitor or other agent.

PersonalRepresentative
A person who administers a deceased person's estate. If there is a will and the personal representative is named in it they are known as an executor. If there is no will, or they are appointed by the court, they are known as an administrator. More on the responsibilities of a personal representative.

PET
See potentially exempt transfer.

Phasedretirement
Where the deceased has divided their pension entitlement into a series of segments and has agreed a plan on retirement with their pension provider to take so many segments each year.

Politicalparty
A gift to a political party qualifies for exemption from inheritance tax if at the last general election preceding the transfer either two members of the party were elected to the House of Commons, or one member of the party was so elected and not less than 150,000 votes were given to candidates who were members of that party.

Potentiallyexempttransfer
Up to 22 March 2006, a potentially exempt transfer (PET) was an outright gift to an individual, to an accumulation and maintenance trust, or to a disabled person's interest, which becomes an exempt transfer if the donor lives for seven years after the date of the gift.

Powerofattorney
An authority given by one person to another to act for him in their absence. The person authorised to act is the attorney of the other. See also enduring power of attornery.

Privilegedwill
A will made by a soldier on active service or a sailor at sea which does not have to comply with the usual formalities to make it valid. It does not have to be in writing, or, if it is in writing, does not have to be witnessed by two witnesses. The soldier or sailor can also be a minor.

Probate
Strictly, the exhibiting and proving of a will by the executors. In common usage as a general term describe the process of obtaining a grant of representation.

ProperLiferent
A Scottish interest in property.

Property
The word 'property' for inheritance tax purposes includes all types of asset, cash, stocks and shares etc as well as land and buildings, including all rights and interests of any description that are legally enforceable.

Proportionatecharge
An inheritance tax charge on a relevant property trust (link to relevant property trust in the glossary) which arises when property in the trust ceases to be relevant property or when the trustees make a disposition which reduces the value of the relevant property. The main examples of property ceasing to be relevant property are when the settlemen...

Quicksuccessionrelief
See successive charges relief

QuotedShares
Shares in a company which are quoted on a recognised stock exchange, including one situated outside the UK

Relatedproperty
Related property is property that is in the estate of a spouse or civil partner, or belonging to a charity or one of the political, national or public bodies to which exempt transfers may be made. There are special rules for valuing related property.

related
When settlor sets up a trust, any other trusts he sets up on the same day are related settlements.

Relevantbusinessproperty
Types of property on which business relief may be available. These include

reldep
A relevant dependant of a member of a registered pension scheme is someone who at the date of the scheme member's death was

Relevantproperty
Settled property held on a relevant property trust.

relprop
From 22 March 2006, a relevant property trust is any trust in which the beneficiary's interest is not one of the following: • an immediate post-death interest • a transitional serial interest • a disabled person's interest • a trust for a bereaved minor • an age 18 to 25 trust

relievableproperty
Property on which business relief or agricultural relief is available.

Remoterissue
Grandchildren, great-grandchildren (and so-on) of the deceased.

Resident
For inheritance tax purposes, residence has the same meaning as for income tax purposes. To be regarded as resident in the UK you must normally be physically present in the country at some time in the tax year. You will always be resident if you are here for 183 days or more in the tax year. More information about this can be found in the booklet I...

Residue
The part of an estate which is left after the payment of specific and pecuniary legacies, debts, funeral expenses and IHT.

Restrictionondisposal
The value of an asset may be reduced if the right to dispose of it is restricted.

ReversionaryInterest
The future right to an interest in settled property.

Settledproperty
See settlement.

Settlement
A settlement occurs when property is held in trust for successive beneficiaries. The property which a settlor puts into trust is known as the trust fund or 'settled property'.

Settlor
A person who puts property into a trust. For inheritance tax purposes a settlor is the person who makes a settlement or who directly or indirectly provides the assets for a settlement.

sett
When settlor sets up a trust, the settlor's cumulative total is all the chargeable transfers made in the seven years before the setting up of the trust. While the settlor is alive, the cumulative total does not include the amount of any potentially exempt transfers (PETs). If the settlor's cumulative total is later adjusted to include PETs which be...

Simultaneousdeaths
For inheritance tax, if two or more people die and it is not known who died first, we assume that they have died at the same moment. This does not alter the legal position for the administration of the estate which is that the elder is presumed to have died first. This is also known as commorientes and further information on this subject can be fou...

Situated
Assets are situated according to general law. Common examples of where assets are situated are

Situsofassets
See situated

Smallgifts
Small gifts which are exempt from inheritance tax of up to £250 in each tax year to any number of different recipients. The exemption cannot be combined with any other exemption such as the annual exemption.

SpecialCommissioners
The Special Commissioners hear and determine appeals concerning decisions of the Inland Revenue relating to all direct taxes including income tax, corporation tax, capital gains tax and inheritance tax

SpecialTrust
Types of discretionary trusts where the settled property held on them is not relevant property.

Specificgifts
A gift other than a gift of residue Typical specific gifts are pecuniary legacies, gifts of particular assets such as the deceased's residence, furniture, jewellery and other household and personal goods and effects or shares in companies and business assets.

Specifiedexempttransfers
Gifts made to the deceased's spouse or civil partner charities, political parties, housing associations, maintenance funds for historic buildings and employee trusts must be added back to the estate to see if the estate qualifies as an excepted estate.

Specifiedtransfers
Gifts of cash, chattels or corporeal moveables, quoted shares or securities, or outright gifts of land or buildings to individuals, not gifts into trust. For an estate to qualify as an excepted estate (excepted estate), specified transfers made within 7 years of death cannot exceed £100,000.

Spouse
A person who is legally married to someone else.

Successivechargesrelief
A relief designed to reduce the burden of IHT where an estate taxable on death reflects the benefit of property received within the previous five years under a transfer on which tax was (or becomes) payable. Calculation of the relief is shown in the article- Tell me how to calculate successive charges relief.

survivingcivilpartner
A person whose civil partnership has ended through the death of their civil partner.

Survivorship
Where property is owned jointly under a joint tenancy, on the death of one of the joint tenants, the deceased's share of the joint property passes automatically to the surviving joint tenant(s). The property cannot be passed to anyone else under a will or intestacy.

Taperrelief
If the total chargeable value of all the gifts made between three and seven years before a death is more than the threshold at death, then taper relief is due. The relief reduces the amount of tax payable on a gift, not the value of the gift itself. Find out more in the article How do I calculate taper relief.