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IHT the 7 year cumulation period Example 2

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA TX-UK Exams › IHT the 7 year cumulation period Example 2

  • This topic has 1 reply, 2 voices, and was last updated 7 years ago by Tax Tutor.
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  • August 13, 2017 at 6:16 am #401652
    titanjst
    Member
    • Topics: 1
    • Replies: 0
    • ☆

    I am so confused by this. If a donor survied 7 years after PET and CLT were made, then the IHT is exempted. However donor has paid 25%while putting money in the trust for the portion over thresholds. And the answer for example 2 did not mention this 25% is deductable as a lifetime tax paid.

    Did I misunderstood, missed any part or it is not even deductable?

    If not deductable is the case why bother putting money in CLT and waste 25%?

    Can anyone help?

    Thanks so much

    August 14, 2017 at 3:55 pm #401807
    Tax Tutor
    Member
    • Topics: 2
    • Replies: 3965
    • ☆☆☆☆☆

    If the taxpayer survives for more than 7 years from a CLT then no additional IHT is payable on death so there is nothing to deduct the lifetime charge from – the right amount of tax was paid in lifetime = end of story. Why a taxpayer might use a trust is a separate issue and not something to bothered with at this level just learn the method.

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