- February 25, 2020 at 6:04 pm
I’m hoping you can assist. I’m busy working through Practice questions for Tx-UK and came across this one via BPP’s Material
Dylan put 270,000 into a trust on 2 Feb 2019. He had previously given 200,000 to his brother on 24 October 2014 and had made another gift into a trust on 12 August 2015 of which the gross chargeable transfer was 158,000
How much lifetime tax is payable on the gift on 2 February 2019
A – 66,000
B – 25,750
C – 24,250
D – 19,400
I calculated the answer as D (270,000 less AE 2018/29 3,000 and AE 2017/18 3,0000) less Nil Rate band (325,000 – 158,000) * 20% The memo states the correct answer is C and that a tax rate of 25% should be used, however there’s no mention that Dylan pays the taxes on the 2nd gift. Is the assumption then if there is no mention of who pays the tax that it is paid by the Donor?
Thank youFebruary 29, 2020 at 4:50 am
Yes – the trustees need to elect to pay the IHT so if no mention is made in the question of who has paid the tax you must assume that no election has been made and it is therefore the donor who has paid the tax
I thought that I had dealt with that in the lecture but apologies if that is not the caseMarch 2, 2020 at 6:34 pm
No problem, thanks for answering. It’s probably me that didn’t recall that it was mentioned in a lecture.
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