IHT

214 ADANA (ADAPTED) Walk in the footsteps of a top tutor
Adana died on 17 March 2022, and inheritance tax (IHT) of £566,000 is payable in respect of
her chargeable estate. Under the terms of her will, Adana left her entire estate, which does
not include a main residence, to her children.
At the date of her death, Adana had the following debts and liabilities:
1 An outstanding interest?only mortgage of £220,000.
2 Income tax of £43,700 payable in respect of the tax year 2021/22.
3 Legal fees of £4,600 incurred by Adana’s sister which Adana had verbally promised to
pay.
Adana’s husband had died on 28 May 2006, and only 20% of his inheritance tax nil rate band
was used on his death. The nil rate band for the tax year 2006/07 was £285,000.
On 22 April 2010, Adana had made a chargeable lifetime transfer of shares valued at
£500,000 to a trust. Adana paid the lifetime IHT of £52,250 arising from this gift. If Adana had
not made this gift, her chargeable estate at the time of her death would have been £650,000
higher than it otherwise was. This was because of the subsequent increase in the value of the
gifted shares.

4 How much of the IHT payable in respect of Adana’s estate would have been saved if,
under the terms of her will, Adana had made specific gifts of £400,000 to a trust and
£200,000 to her grandchildren, instead of leaving her entire estate to her children?
A £240,000
B £160,000
C £0
D £80,000

ANS-C
Good day,Pls i don’t understand why the answer is 0 pounds. I’ll appreciate if you can explain better