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Dear Sir,
Thank you for your great lectures and guidance.
I see the example 24.5 is not complete and wished to know to get the total IHT liability, do we then need to calculate the amount on the death estate by using the residential nil rate band and the remainder (balance) to be taxed at 40% as the nil rate band is exhausted.
Kindly advise if we then add the three figures from the lifetimes transfers, transfers at death and the death estate taxation to get the total IHT due?
Please confirm the above two points.
Thank you.
Aayush Shah
Hi Aayush – thank you for bringing this to my attention – it appears that with the editing of old and new lectures the final part of the answer to this class example got missed out! My apologies!
Let me deal firstly with your 2nd question – be careful about the requirement – it is not to compute a figure of the TOTAL IHT payable as a result of the death but is to “compute the IHT payable as a result of the death of X”
There are 2 parts to this answer:
1. Compute the IHT payable on the lifetime transfers made within the 7 years of the date of death – this exercise has been completed in the lecture.
2. Compute the IHT payable on the death estate and this is as you correctly state above -deduct the available residential nil rate band from the value of the property within the death estate. The nil rate band has been fully used on the lifetime transfers, so now tax the chargeable estate at 40%.
These are 2 separate computations as different persons may be responsible for the payment of the IHT.
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