Home

  • CII Exams
    • AF Exams
    • CII AF1 Personal Tax and Trust Planning
    • CII AF4 Investment Planning
    • CII AF5 Financial Planning Process
    • CII AF7 Pension Transfers
    • CF Exams
    • CII CF1 UK Financial Services, Regulation and Ethics
    • CII CF6 Mortgage Advice
    • CII CF8 Long Term Care Insurance
    • ER Exams
    • CII ER1 Equity Release
    • FA Exams
    • CII FA1 Life Office Administration
    • CII FA2 Pensions Administration
    • IF Exams
    • CII IF1 Insurance Legal and Regulatory
    • CII IF2 General Insurance Business
    • CII IF3 Insurance Underwriting Process
    • CII IF4 Insurance Claims Handling Process
    • CII IF5 Motor Insurance Products
    • J0 Exams
    • CII J02 Trusts
    • CII J05 Pension Income Options
    • CII J07 Supervision in a Regulated Environment
    • CII J10 Discretionary Investment Management
    • CII J12 Securities Advice and Dealing
    • LP Exams
    • CII LP2 Financial Services Products and Solutions
    • R0 Exams
    • CII R01 Financial Services, Regulation and Ethics
    • CII R02 Investment Principles and Risk
    • CII R03 Personal Taxation
    • CII R04 Pensions and Retirement Planning
    • CII R05 Financial Protection
    • CII R06 Financial Planning Practice
    • CII R07 Advanced Mortgage Advice
  • CII Qualifications
    • CII Qualifications Overview
    • Advanced Diplomas
    • CII Advanced Diploma in Financial Planning
    • Awards
    • CII Award in Financial Administration
    • CII Award in Life and Pensions Foundations
    • CII Award in Long Term Care Insurance
    • CII Award in Regulated Pension Transfer Advice
    • Certificates
    • CII Certificate in Advanced Mortgage Advice
    • CII Certificate in Discretionary Investment Management
    • CII Certificate in Equity Release
    • CII Certificate in Financial Services
    • CII Certificate in Insurance
    • CII Certificate in Investment Operations
    • CII Certificate in Mortgage Advice
    • CII Certificate in Paraplanning
    • CII Certificate in Regulated Financial Services Operations
    • CII Certificate in Securities Advice and Dealing
    • Diplomas
    • CII Diploma in Financial Planning
    • CII Diploma in Regulated Financial Planning
  • Main Pages
  • Home
  • Blog
  • Corporate
  • FAQ
  • About
  • Contact
  • Home
  • Blog
  • Corporate
  • FAQs
  • About
  • Contact
Cart
Brand Financial Training
  • CII Exams
    • Exam-Col-01
      • AF Exams
      • CII AF1 Personal Tax and Trust Planning
      • CII AF4 Investment Planning
      • CII AF5 Financial Planning Process
      • CII AF7 Pension Transfers
      • CF Exams
      • CII CF1 UK Financial Services, Regulation and Ethics
      • CII CF6 Mortgage Advice
      • CII CF8 Long Term Care Insurance
      • ER Exams
      • CII ER1 Equity Release
      • FA Exams
      • CII FA1 Life Office Administration
      • CII FA2 Pensions Administration
    • Exam-Col-02
      • IF Exams
      • CII IF1 Insurance Legal and Regulatory
      • CII IF2 General Insurance Business
      • CII IF3 Insurance Underwriting Process
      • CII IF4 Insurance Claims Handling Process
      • CII IF5 Motor Insurance Products
      • J0 Exams
      • CII J02 Trusts
      • CII J05 Pension Income Options
      • CII J07 Supervision in a Regulated Environment
      • CII J10 Discretionary Investment Management
      • CII J12 Securities Advice and Dealing
      • LP Exams
      • CII LP2 Financial Services Products and Solutions
    • Exam-Col-03
      • R0 Exams
      • CII R01 Financial Services, Regulation and Ethics
      • CII R02 Investment Principles and Risk
      • CII R03 Personal Taxation
      • CII R04 Pensions and Retirement Planning
      • CII R05 Financial Protection
      • CII R06 Financial Planning Practice
      • CII R07 Advanced Mortgage Advice
      • Study Kit Box
  • CII Qualifications
    • Qual-Col-01
      • CII Qualifications Overview
      • CII Advanced Diploma in Financial Planning
      • CII Award in Financial Administration
      • CII Award in Life and Pensions Foundations
      • CII Award in Long Term Care Insurance
      • CII Award in Regulated Pension Transfer Advice
    • Qual-Col-02
      • CII Certificate in Advanced Mortgage Advice
      • CII Certificate in Discretionary Investment Management
      • CII Certificate in Equity Release
      • CII Certificate in Financial Services
      • CII Certificate in Insurance
      • CII Certificate in Investment Operations
      • CII Certificate in Mortgage Advice
      • CII Certificate in Paraplanning
      • CII Certificate in Regulated Financial Services Operations
      • CII Certificate in Securities Advice and Dealing
    • Qual-Col-03
      • CII Diploma in Financial Planning
      • CII Diploma in Regulated Financial Planning
Brand Financial Training > AF1 > The Certainties of Life: Death, Taxes and IHT Questions on your CII AF1 or R03 Exam
  • Previous
  • Next
The Certainties of Life: Death, Taxes and IHT Questions on your CII AF1 or R03 Exam
July 10, 2018
The Certainties of Life: Death, Taxes and IHT Questions on your CII AF1 or R03 Exam

The Certainties of Life: Death, Taxes and IHT Questions on your CII AF1 or R03 Exam

Posted by The Team at Brand Financial Training on July 10, 2018 in AF1, HMRC, R03, Taxation
Last updated on September 25th, 2019 at 4:20 am
The Certainties of Life: Death, Taxes and IHT Questions on your CII AF1 or R03 Exam

There are only two certainties in life according to Benjamin Franklin. To those, we can add the certainty that questions on Inheritance Tax (IHT) will come up if you are sitting the R03 exam and of course the AF1 exam. Learn more about it so you don’t get caught out on exam day.

THIS ARTICLE IS RELEVANT TO EXAMINABLE TAX YEAR 2017/18.

IHT is the place where death and taxes collide; although according to HMRC statistics, only around 3.9% of all deaths in 2014-15 led to an IHT charge (these are the latest figures). This is largely because the estate value was less than the Nil Rate Band (frozen at  £325,000 since 2009), but in other cases, it will be the result of the transferable nil rate band facility, as well as good lifetime planning utilising exemptions and reliefs.

A major tax saver is the inter-spouse exemption. Transfers between UK-domiciled spouses and civil partners, during life and on death, are exempt from IHT. This applies whether or not the spouses are living together but stops on divorce. If the transferor is UK domiciled but the spouse or civil partner is not, the exemption is  equal to the prevailing Nil Rate Band – currently  £325,000.  A non-UK domiciled spouse can make an election to be treated as UK domiciled for IHT purposes, which will mean that transfers from their UK domiciled spouse/civil partner will then be completely exempt, but it will also mean that they will pay IHT on their worldwide assets.

You can count on IHT questions turning up on your #CII #R03 exam. This article includes a useful example to help your exam revision. Share on X

 

Changes to the Rules Pertaining to Deemed Domicile

Prior to April 2017, someone would be deemed to be UK domicile if they had been resident in the UK for 17 out of the last 20 years.  Since 2017, this changed to 15 out of the last 20 years.

Also in 2017, a new category of deemed domicile known as ‘formerly domiciled resident’ was introduced. Someone will be classed as a formerly domiciled resident if they:

  • are born in the UK with a UK domicile of origin
  • have acquired another non-UK domicile of choice
  • are now resident in the UK and were resident in the UK in at least 1 of the 2 previous tax years

The upshot of these rules is that they will be deemed domicile in the UK from the date they become UK resident again.

Transfers Between Spouses/Civil Partners

Remember too that any unused Inheritance Tax nil rate band can be transferred  from a late spouse or civil partner to the second spouse or civil partner when they die. This can increase the Inheritance Tax threshold of the second partner – from £325,000 to as much as £650,000 in 2018/19, depending on the circumstances. The transfer must be claimed on the second death, within two years of the end of the month in which death occurs. Unused nil rate band on the first death is calculated as the available nil rate band on the first death (M) minus the nil rate band set against the chargeable transfer on that death (VT). The nil rate band maximum on second death is then increased by the same percentage that M – VT represents of the nil rate band maximum at the first death. This is best illustrated by an example.

Example:

Doris died in May 2007, leaving an estate of £300,000. She leaves £120,000 to her three children and the rest of her estate (£180,000) to her husband Boris. When Doris died the Inheritance Tax threshold was £300,000. Boris dies in September 2018, leaving an estate worth £500,000 which he leaves to his children. The amount of Doris’s threshold that can be transferred to Boris is:

  • threshold at the time of the first death (Doris) = £300,000
  • minus the legacies to her children who aren’t exempt = £120,000
  • leaving a remaining threshold of £180,000

The percentage by which to increase the threshold on the second death (Boris) is:

  • the threshold remaining from Doris’s death (£180,000)
  • divided by the threshold at the time of Doris’s death (£300,000)
  • multiplied by 100 (£180,000 ÷ £300,000 × 100 = 60%)

So the threshold available to transfer to Boris’s estate is £325,000 × 0.6 (60%) = £195,000. This is added to Boris’s own threshold of £325,000, increasing his threshold to £520,000. Because Boris’s estate is lower than this, there’s no Inheritance Tax to pay.

Grab the resources you need!

If you’re studying for your CII R03 exam, and you’re aiming for a comfortable pass, you need to get all the practice you can. Grab our free taster to try out one of Brand Financial Training’s resources for yourself.  Click the link to download the R03 mock paper taster now!

Click here to download our free taster mock paper for CII R03

 

Tags:deemed domicile, Inheritance tax, nil rate band, transfers between spouses

Related posts

  • Brand Bitesize: Residence Nil Rate Band (RNRB)
    Brand Bitesize: Residence Nil Rate Band (RNRB)
  • Brand Bitesize: Transfers into Discretionary Trusts
    Brand Bitesize: Transfers into Discretionary Trusts
  • Inheritance Tax and Exempt Transfers
    Inheritance Tax and Exempt Transfers
  • Understanding Loan Trusts
    Understanding Loan Trusts

Subscribe

Get new blog posts delivered straight to your inbox!

By ticking this box you are giving your consent for us to email you when a new post is published on our blog. We may also email you with additional information and offers that we believe may be of interest to you. We take your privacy very seriously and we will never share your personal information. You can unsubscribe from our emails at any time. For information about how we handle your data, please read our privacy notice.

Please tick the box to give your consent for us to email you when a new post is published on our blog. We may also email you with additional information and offers that we believe may be of interest to you. We take your privacy very seriously and we will never share your personal information. You can unsubscribe from our emails at any time. For information about how we handle your data, please read our privacy notice at https://brandft.co.uk/privacy-policy/

Search

To search our blog just enter a keyword and click search.

Latest Posts

  • Friday Five Focus on Regulation – 5 Questions in 5 Minutes – 18 Jul 2025
    By The Team at Brand Financial Training
    July 18, 2025
  • National Insurance Employment Allowance
    By The Team at Brand Financial Training
    July 15, 2025
  • Friday Five Focus on Protection – 5 Questions in 5 Minutes – 11 Jul 2025
    By The Team at Brand Financial Training
    July 11, 2025
  • Chargeable Events on Bonds Held in Trusts
    By The Team at Brand Financial Training
    July 8, 2025

Follow us

Categories

Archives


All content © Brand Financial Training Ltd, 2008-2024. Unauthorised use and/or duplication of this material without express and written permission from this blog’s author and/or owner is strictly prohibited.

Excerpts and links may be used, provided that full and clear credit is given to Brand Financial Training Ltd https://brandft.co.uk with appropriate and specific direction to the original content.

Contacts

Email :
Tel : +44 (0)345 680 1682
You can leave a voicemail for us but for the quickest response, please email our customer service team at the above email address, who will respond within 24 hours.

Calls are charged at the same rate as standard landline numbers. This rate will depend on your telephone provider and may be included in your tariff.

Newsletter

Stay up to date with our informative monthly newsletter tailored for you.

Learn more

We write for...

Logo: Money Marketing Logo: Professional Paraplanner Professional Paraplanner Awards 2021
Learn more

We support...

In Aid of Trussell Trust The Clothing Bank
Find out more about how we work to make a social impact.
Learn more

Home
About
Blog
Contact
Social Impact

Money back guarantee
Corporate
Help and FAQs
Learning Resource Updates

Email :
Tel : +44 (0)345 680 1682 (Voicemail only)

Calls are charged at the same rate as standard landline numbers. This rate will depend on your telephone provider and may be included in your tariff.

LinkedInLinkedInTwitter/XTwitter/X YouTubeYouTubeYouTubeYouTube

©2025 Brand Financial Training Ltd · Reg No: 7153959 · VAT No: 979 2499 45

Policies | Terms of use | Terms of sale | Privacy policy | Cookie policy