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I need help on a question of examen Pratice Kit (UK Advanced tax) its question 13 Kesme and Soba the inheritance tax part…i understood the concept of spouse exemption..325,000 available NRB for gift to the daughter which was taxable..why the remaining 45,000 was multiplied 40/60 to give 30k as liability..can someone please explain ??.. i know tax rate on death is 40% then why divide by 60???
I don’t have the question. However, if the question asks that £370000 be left to the daughter, then it is necessary to calculate assets that would be needed before tax in order that after the tax is paid the £370000 will be available to the daughter. Therefore £45000 x 40/60 =£30000. In other words £400000 must be held in order to gift £370000 before inheritance tax to the daughter. £370000 +£30000 =£400000. £400000 – £325000 = £75000. £75000 × 0.4 = £30000 tax to be paid.
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