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Dear sir,
Reference Open tuition Note Page No. 141 – Inheritance tax1) Please refer to Joe Kerr example 1, the solution gives the gross chargeable transfer as 628,250. May I request the workings for this figure, please?
2) Tax due is shown as balance estate x 40%, that is 758K x 40% = 303.2K. Will there be not credit for the tax already paid on the transfer to Trust of of 81K (405 K @ 20%)?
Thanks in advance.Note: The transfers were:
Gift to son 40K less 5K exemtpion less Annual exemption (AE) 3K = 32K
Trust Chargeable transfer 405+tax 20% 81 = 486K less AE 3K = 483
Share transfer 4000 shares – 184K less AE 3 K = 181K, which totals to 696K.1) The working is shown in the previous part of the answer headed “Lifetime transfers chargeable on death”
2) No. You do not appear to have looked at the first part of the answer dealing with lifetime transfers chargeable when made and then on death which clearly show the workings – there is NO calculation of 405,000 x 20%!
The lifetime tax actually paid – as per answer – is deducted in deriving the tax payable on the lifetime transfer chargeable on death.Dear sir,
Thanks a lot for clarifying the issue. I solved few other question and got more clear with the calculations.
Am I correct if I say that the first PET of 40,000 made 2008-2009 period becomes exempt from tax, because the donee died in 2015 and 7 years have elapsed.
The total tax payable on death will be the tax on the two PET and the CLT that is 790+ 50100+303,200 = 354,090.
Thanks and regards
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