Hello,
I need your help for the following question.
– C made the following question lifetime gifts , and agreed to pay any inheritance tax that arose as a result of the second gift.
(a) A gift into a discretionary trust on 18 Feb 2017- the gross chargeable transfer was £274,000.
(b) A cash gift of £150,000 into a discretionary trust on 20 May 2018.
How much lifetime tax is paid by C in respect of the gift on 20 May 2018?
1. The answer is £23,250.
2. In the answer, for the transfer of £274,000, the nil rate band was used and thus out of the £325,000, £51,000 was the remainder. And then, 150000-3000(current year 18/19)-3000(previous year 17/18)-51000= £93000. And finally, 93000*25%= £23,250.
3. My issue is that why no AE was deducted from the 274,000?
Thanks.
Ask the Tutor ACCA TX-UK
inheritance tax
As in many objective testing questions you must read the question very carefully and understand the terms used!
In (a) the figure given is the gross CHARGEABLE TRANSFER which as you should know is AFTER the deduction of any available exemptions, like the AE.
In (b) you are told the amount of the cash gift - this is the transfer of value which is BEFORE the deduction of any AE!
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