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Inheritance tax

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA TX-UK Exams › Inheritance tax

  • This topic has 4 replies, 4 voices, and was last updated 7 years ago by Tax Tutor.
Viewing 5 posts - 1 through 5 (of 5 total)
  • Author
    Posts
  • December 1, 2015 at 5:46 am #286610
    bashith
    Participant
    • Topics: 5
    • Replies: 2
    • ☆

    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.132,160

    The answer i got was B. £88,000
    (£600,000-£325000)=£275000*40%= £110000
    Taper relief 20% =(£22,000)
    = £88000

    December 1, 2015 at 10:06 am #286676
    unstopabl3
    Member
    • Topics: 8
    • Replies: 121
    • ☆☆

    Incorrect, 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)

    December 1, 2015 at 5:04 pm #286788
    bashith
    Participant
    • Topics: 5
    • Replies: 2
    • ☆

    Thanks for your concern.But what if it was CLT in place of the PET on 10 July 2011

    December 1, 2015 at 6:19 pm #286808
    ksay2mbd
    Member
    • Topics: 6
    • Replies: 4
    • ☆

    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.

    December 7, 2015 at 12:00 pm #288449
    Tax Tutor
    Member
    • Topics: 2
    • Replies: 3965
    • ☆☆☆☆☆

    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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