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Hi,
Please I am slightly confused regarding nil rate band allowance in practice question 38. The NRB in 2007/08 was £300000 so this has reduced the CLT for the gift to a trust in 2007. Then we have another CLT from tax year 2014/15 and in answers (section a), it says that £325000 was used by Gross Chargeable Transfers in previous 7 years but only £300000 was available before and also used no? So £25000 is still available for tax year 2014/15? So NRB in 2014/15 should then be £25000 I would suppose.
Thank you very much in advance for your time and reply 🙂
NelkaHave you worked through all the IHT lectures?
The NRB does not “reduce” the CLT it simply determines how much of the CLT at the time the transfer is made will be TAXED at a NIL rate and how much will then be taxed at 20% or 25%.
In determining how much of the NRB, if any, is available at the time the CLT is made we look back 7 years to see the total of the gross chargeable lifetime transfers made in that period. If that exceeds the current NRB as in this example – 362,500 exceeds 325,000 then none of the current CLT will benefit from any NRB – the fact that the NRB has been increased in that period is irrelevant.
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