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Proformas hold the key to exam pass

Kamran Ali explains how to pass Inheritance Tax, Trusts and Estates module of the CTA exams

March 2017

Focus on proformas!
If inheritance tax (IHT) has never been studied before (i.e. in prior qualifications), then it is very common to feel a little overawed by the sheer number of proformas within the syllabus. The key here is to spend time in learning and practising the ‘seven key proformas’ and at the same time ensuring you can distinguish between each one. So, what are these seven key proformas? Well…..
1) Lifetime tax on lifetime gifts.
2) Death tax on lifetime gifts.
3) Death estate.
4) Income tax on interest in possession trusts.
5) Income tax on discretionary trusts.
6) Exit charges on relevant property trusts.
7) Principal charges on relevant property trusts.
Is it all about proformas?
The IHT module has a great mix of both calculation and written questions in the exam. Ensuring you practise the written questions is vital in passing the module, as you will not get 12 questions purely focused on numbers.
Using your legislation wisely is a useful tool to help you with some of these written questions. For example, it is common to get questions asking students to identify whether a particular gift qualifies for business property relief.
Avoid using up valuable memory space on learning such things when you can just spend some time before the exam highlighting your legislation carefully to help with the conditions for this relief.
And here’s a tip to help: when highlighting the legislation, use two different colour highlighters to indicate what qualifies for 100% or 50% business property relief! This will help you remember the information in the exam hall.

Inheritance tax reliefs are a must
There are a significant number of reliefs which get tested regularly within the calculation questions. It is imperative to know not just how to calculate the particular relief but also which proforma it belongs in. The key IHT reliefs examinable are taper, business property, agricultural property, fall in value, quick succession and post mortem reliefs.

What about trusts and estates?
This module will never examine 12 questions purely focusing on IHT, so it is essential that you learn the trusts and estates part of the syllabus. This often includes how to calculate income tax on trusts or inheritance tax charges on trusts.
Commonly, there are also one to two questions focusing on capital gains tax, so watch out for this topic, which often gets overlooked by many students.
• Kamran Ali is a tutor at BPP

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