Inheritance Tax

This topic has 2 replies, 3 voices, and was last updated 10 years ago by Tax Tutor.

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November 18, 2015 at 8:49 am #283474
mansoormmaw
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Can you please answer the following question.
On 14 November 2014, Jane made a cash gift to a trust of £800,000 (after deducting all available exemptions).
Jane paid the inheritance tax arising from this gift. Jane has not made any other lifetime gifts.
What amount of lifetime inheritance tax would have been payable in respect of Jane’s gift to the trust?
A £95,000
B £190,000
C £118,750
D £200,000
I think the answer is 95,000 [(800,000 – 325,000)x20%]
November 19, 2015 at 12:32 pm #283924
unstopabl3
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Incorrect, Answer is C, if the doner pays the tax on lifetime transfers, there will be 25% tax not 20%.
November 20, 2015 at 1:14 pm #284152
Tax Tutor
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As unstopabl3 stated if the donor pays the lifetime tax on a CLT it is a net transfer and therefore tax is charged at 25% above the nil rate band
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