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IHT – Grossing up when donor pays during lifetime

Forums › ACCA Forums › ACCA TX Taxation Forums › IHT – Grossing up when donor pays during lifetime

  • This topic has 5 replies, 2 voices, and was last updated 12 years ago by wgk.
Viewing 6 posts - 1 through 6 (of 6 total)
  • Author
    Posts
  • November 21, 2012 at 12:50 pm #55573
    rubywally
    Participant
    • Topics: 6
    • Replies: 4
    • ☆

    Hi

    I am confused about the rule regarding grossing up- in the study books it says 25% is what the donor pays but with the notes ACCA have got it only to gross up (20/80)

    Can anyone explain this to me?

    Thanks

    November 21, 2012 at 1:48 pm #108241
    wgk
    Participant
    • Topics: 55
    • Replies: 80
    • ☆☆

    Assume:
    – A CLT of 300,000 after exemptions.
    – The donor pays IHT when made
    – Assume all NRB used

    Therefore:
    – IHT = 300,000 x 25% = 75,000
    – Gross = (300,000 + 75,000) = 375,000

    Or if 150,000 remains of NRB:
    Then IHT Liability:
    – 150,000 @ 0%
    – 150,000 @ 25% = 37,500
    – Gross = (300,000 + 37,500) = 337,500

    🙂

    November 21, 2012 at 4:33 pm #108242
    rubywally
    Participant
    • Topics: 6
    • Replies: 4
    • ☆

    thank you- does this apply to PET’s too? also the notes on IHT ACCA had did not show 25% but done 20/80 but this equals to the same amount so i assume if i use the 25% or 20/80 it will be fine? is this correct?
    Thank you again- i experienced a light switch moment were it made sense! lol

    November 21, 2012 at 5:01 pm #108243
    wgk
    Participant
    • Topics: 55
    • Replies: 80
    • ☆☆

    NO, it does not apply to PETS. PETS are ‘chargeable on death’, so the 20% or 25% do not apply to PETS.

    25% is the same as (20/80) x 100
    0.25 = 80/100
    🙂

    November 21, 2012 at 5:16 pm #108244
    rubywally
    Participant
    • Topics: 6
    • Replies: 4
    • ☆

    Thank you for all your help!

    November 21, 2012 at 6:55 pm #108245
    wgk
    Participant
    • Topics: 55
    • Replies: 80
    • ☆☆

    anymore questions use my email address: sirliam@hotmail.co.uk

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