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Can u please answer this question.
Kristin gave shares worth £150,000 to a trust on 15 September 2006 and shares worth £600,000 to her brother on 10 July 2011.The nil rate band on 2006/07 was £285,000 and in 2011/12 was £325,000.Kristin died on 23 October 2014.
Ignoring the annual exemption, what is the inheritance tax payable on Kristin’s death in relation to her lifetime transfers?
A. £170,000
B. £88,000
C.£136,000
D.132,160The answer i got was B. £88,000
(£600,000-£325000)=£275000*40%= £110000
Taper relief 20% =(£22,000)
= £88000Incorrect, answer is “C” as available NRB will be $325000-$150000 (as we will reduce the NRB by the gross chargeable amount of transfer 7 years prior to this PET)
Thanks for your concern.But what if it was CLT in place of the PET on 10 July 2011
it would be the same calculation. go and see the video on 7 year cumulation period again. when calculating the nil rate band available for any CLT or PET, we always look if there is any “CLT” in 7 years period prior to that transaction.
Both unstopabl3 and ksay2mbd are correct in their statements – your answer would only have been correct if the transfer in September 2006 had been a PET. It would then be more than 7 years old at the date of death and would be entirely exempt and hence not taxed on death and would also not impact on the taxability of those transfers that do fall within the 7 years of death and hence do become taxable
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