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In bpp practise kit there is Mcq answer for marcus question
Although Marcus pays iht they used 20% rather than 25% (he is the donor) .
Why is that?
2)
if 3 gifts made to 3 nephews each of 150 in same date .
There will be no small gift exemption all will be chargeable bcoz total gifts more than 250 in a tax year right? Can they get annual exemption . Am confused
3) if cash gift to husband, there is no iht liability . Its exempt right? But it will use nil rate band or not?
I do not have the BPP kit so I do not have the question but think probably that you may have misunderstood question – are you sure the transfer is a CLT?
Yes AE is available if not already used on transfers made earlier in tax year
Transfers between spouses are EXEMPT so is NOT taxable so will NOT use nil rate bandThe question from sept/dec 15 (marcus)
In bpp kit they make it as mcq ,
1) whats amount of lifetime iht paid by trustee?
As figures are different: clt 315000
Answer:
300,000×0%
15000×20%=30002) whats amount lifetime iht paid by marcus
Gross clt 491250
Answer:
10,000 ( 325000-315000)x0%
481250×20%= 96250I copied the answers from the kit, my question is why in both cases using 20%??
If in part 2) above which is your problem the question has given you the amount of the GROSS clt as you label it above – then the tax rate on the GROSS transfer IS 20% above the nil rate band – had they told you simply the amount of the net chargeable transfer (491,250 – 96,250 = 395,000) then you would use the net rate of 25%
In the example the net transfer of 395,000 would be added to the 315,000 from the first transfer which would then be taxed as follows:
10,000 x 0%
385,000 x 25% = 96,250 as above
As is often the case with MCQ you have to read both the requirements and the information VERY carefully!!
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