F6 Chapter 24, Section 8 – Joe Kerr – AE on CLT, Repeated use of Nil Rate Band

Hello,

1. You use AE to decrease the amount of the CLT Chargeable Transfer. AE was not used in previous examples when calculating IHT on transfer for CLTs. Illustrations 8 and 9 just used either the Net or Gross transfer amount to calculate the IHT. Why the change? Taking out AE obviously gives a lower value for Chargeable Transfer.

Also, how would you even know at the time the CLT transfer was made that an AE was allowable? The Donor could live for another 20 years at the time of transfer.

2. When you calculate the IHT due when the CLT transfer is made, you first decrease by the Nil Rate band. This makes sense as, chronologically, it is the first IHT actually to be paid out. However, you later set the full amount of the Nil Rate Band against the first PET and again against the CLT. Would we not have “used up” all the Nil Rate Band on “Charges When the Transfer is Made” by the time we come to do “Charges on Death”? It seems like we are getting double the benefit.

Thank you for this great video course!