9 June exam: Inheritance tax

Hi) i've got question. this example was used in 9 June 2016 exam and i downloaded from accaglobal.com with answers. I wanna know why nill rate band is 296.000? Why we use (1)9oct 2007 gift amout for nill rate band even this happen more than 7 years? Question: James died on 22 January 2015. He had made the following gifts during his lifetime: (1) On 9 October 2007, a cash gift of £35,000 to a trust. No lifetime inheritance tax was payable in respect of this gift. (2) On 14 May 2013, a cash gift of £420,000 to his daughter. (3) On 2 August 2013, a gift of a property valued at £260,000 to a trust. No lifetime inheritance tax was payable in respect of this gift because it was covered by the nil rate band. By the time of James’ death on 22 January 2015, the property had increased in value to £310,000. On 22 January 2015, James’ estate was valued at £870,000. Under the terms of his will, James left his entire estate to his children. The nil rate band of James’ wife was fully utilised when she died ten years ago. The nil rate band for the tax year 2007–08 is £300,000, and for the tax year 2013–14 it is £325,000. Required: (a) Calculate the inheritance tax which will be payable as a result of James’ death, and state who will be responsible for paying the tax. (6mark) Answer: (a) James – Inheritance tax arising on death Lifetime transfers within seven years of death 14 May 2013 £ Value transferred 420,000 Annual exemptions 2013–14 (3,000) 2012–13 (3,000) –––––––– Potentially exempt transfer 414,000 –––––––– Inheritance tax liability 296,000 (working) at nil% 0 W???????????????? 118,000 at 40% 47,200 –––––––– 47,200 –––––––– James’ daughter will be responsible for paying the inheritance tax of £47,200. 2 August 2013 £ Chargeable lifetime transfer 260,000 –––––––– Inheritance tax liability 260,000 at 40% 104,000 –––––––– The trust will be responsible for paying the inheritance tax of £104,000. Death estate Chargeable estate 870,000 –––––––– Inheritance tax liability 870,000 at 40% 348,000 –––––––– The personal representatives of James’ estate will be responsible for paying the inheritance tax of £348,000. Working – Available nil rate band Nil rate band 325,000 Chargeable lifetime transfer 9 October 2007 Value transferred 35,000 Annual exemptions 2007–08 (3,000) 2006–07 (3,000) ––––––– Chargeable transfer (29,000) –––––––– 325.000-29.000=296,000??????????????