Business Relief Guide - 3rd Edition - Feedback & CPD

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Your Details & Feedback

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CPD Questions

In order to test your knowledge and obtain a CPD certificate readers must complete this short test

It is very likely that an investee company that qualifies for the Enterprise Investment Scheme (EIS) will also qualify for Business Relief (BR) but there are many more excluded trades when it comes to EIS qualification. Which of the following is NOT an excluded trade for EIS purposes?*

A. Forestry B. Legal and accounting services C. Dealing in land D. Food delivery services

2. Which of the following statements is true when BR qualifying assets are transferred into trust?*

A. If the assets have been held by the settlor for any length of time and transferred into trust during the settlor’s lifetime, the potential lifetime charge to IHT is always reduced to zero B. The shares still attract IHT relief at 100%, even if the settlor doesn’t survive seven years C. If the shares are subsequently sold by the Trustees and the settlor dies within seven years, the original transfer into the discretionary trust will not become chargeable D. Holdover Relief cannot be utilised in conjunction with BR to defer any CGT otherwise arising on the gift of the shares into the trust

3. Which of the following statements is NOT true?*

A. As a result of the impacts of Covid-19, HMRC has reframed its calculations of what volumes of cash within a business should be considered as ‘excepted assets’ for the purposes of BR B. For the purposes of BR qualification, unlimited cash assets within a business cannot simply be held to guard against unexpected downturns C. For the purposes of BR, it is prudent to retain records that support the specific business need for holding any significant cash assets within a business D. For the purposes of BR, ‘excepted assets’ could include cash or other assets

4. According to Prudential’s recent survey, what was the second most popular answer to this question: If you were to gift part of your inheritance early, what concerns might you have?*

A. They might squander it B. I might need it in the future C. Lack of control over their spending D. They should make their own way in the world

5. Which of the following statements is NOT correct in relation to the clarification of a gift hold-over relief rule announced in the spring budget 2021?*

A. Gift hold-over relief is sometimes used in conjunction with BR B. The clarification applies when a UK resident person controls the transferee company C. The clarification applies from 6 April 2021 D. The relevant rule disapplies entitlement to give hold-over relief

6. Given the frozen residence nil rate band (NRB) for eligible homeowners, which of these amounts represents the additional IHT after five years, as a result of a 4% rise in asset values for estates over £500,000?*

A. £48,330 B. £8,000 C. £43,330 D. £28,000

7. According to HMRC’s 2021 IHT statistics, the average IHT charged per liable estate had increased to £209,000 by 2018/19. This figure has increased by how much since 2012/13?*

A. £10,000 B. £39,000 C. £30,000 D. £3,000

8. Which of the following statements is true?*

A. BR qualifying shares that are eligible for 100% IHT relief can be preference or non-voting shares B. Shareholders need to be a director of the company in order to claim BR C. Companies not seeking to make a profit are eligible for BR D. Only shareholders with a minimum number of shares can claim BR

9. According to a 2021 survey by Barclays Wealth Management, what percent of 45 - 55 year olds do not know if their investments would be subject to inheritance tax?*

A. 50% B. 60% C. 35% D. 65%

10. If a single client with their full nil rate band available, owned a £300,000 house (not eligible for the residence nil rate band), £100,000 cash and £200,000 in BR-qualifying shares (purchased three years ago) at their death, what is their IHT liability? *

A. £240,000 B. £110,000 C. £75,000 D. £30,000

11. In an AIM BR discretionary ISA portfolio, which of the following does NOT apply?*

A. Investment managers are seeking to make the investment income tax, capital gains tax and potentially IHT-free B. The additional permitted subscription (APS) allows a surviving spouse to inherit a one-off additional ISA allowance equivalent to the value of the deceased's ISA at the time of death C. Capital losses are eligible to offset against other capital gains D. The shares are held within a stocks and shares ISA

12. Which of the following is more likely to be a benefit of a non-AIM BR investment offer rather than an AIM-listed BR investment offer?*

A. Diversification of up to 40 or more underlying investee companies is achievable B. Sometimes BR managers get a seat on the board of the investee company C. Regular reporting requirements and governance rules (outside any standard company obligations) apply to investee companies D. Regular trading helps with liquidity and valuations