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Ning Gao died on 15 April 2015
Ning had made the following lifetime gifts
1) On 1 March 2008 Ning made a cash gift of £50000 to her daughter,Bao
2)On 1 February 2009 Ning made a cash gift of £350000 to her son,Shinya on the occasion of his marriage
Ning’s estate,after the deduction of various debts and liabilities, was valued at £750000
Under the terms of her will Ning left £500000 to her husband and £250000 to her daughter Bao
After inheriting part of her mother’s estate Bao decided to set up a discretionary trust. She owned 5500 shares which represented a 55% holding in Prosper Ltd and on 1 March 2016 she transferred 1375 shares into the discretionary trust
The values of the shareholdings in Prosper Ltd on 1 March 2016 were as follows
Holding value per share
up to 25% £5
26% to 50% £12
51% to 74% £25
75% or more £52
Bao’s husband had died on 12 March 2007, and 70% of his inheritance tax nil rate band was not used
The nil rate band for the tax year 2006/07 is £285000 and for the tax year 2008/09 it is £312000Q what is the gross chargeable amount in relation to the gift to Shinya on 1 February 2009?
my q how did it get already used exemption in 2007/08
answer
transfer of value 350000
less marriage exemption (5000)
ae 2008/09 (3000)
ae 2007/08-already used 0
gross chargeable amount 342000Q 2 By how much would the IHT payable on Ning’s death estate of £750000 have been reduced if she had instead died one year later on 15 april 2016
1) The PET on 1 March 2008 will have used the AE 2007/08 even though it never becomes chargeable on death as donor survives for more than 7 years
2) What do you not understand in the answer – the main issue is that the gift to Shinya is no longer taxable which allows the NRB to be used by the chargeable estatebut my first question is how / where it used up his ae it is never stated in the question
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