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Opal is aged 71and has a chargeable estate for inheritance tax (IHT) purposes valued at £950,000.She owns a property, which is valued at £374,000 and has an outstanding repayment mortgage of £160,000. She also holds life insurance on her own life, currently valued at £350,000, but which will pay proceeds of £442,000 in the event of her death.Opal owes £22,400 in respect of a personal loan from a bank and she has also verbally promised to pay legal fees of £4,600 incurred by her nephew. Opal expects the cost of her funeral to be £5,200and this cost will be covered by the £6,000 that she has invested in an individual savings account (ISA).Under the terms of her will, Opal has left all of her estate to her children. Opal’s husband is still alive.On 14 August 2013, Opal had made a gift of £100,000 to her daughterand on 7 November 2022, she made a gift of £220,000 to her son. Both these figures are after deducting all available exemptions.You should assume that both the value of Opal’s estate and the nil rate band will remain unchanged for future years.
What amount of IHT will be payable in respect of Opal’s chargeable estate valued at £950,000 were she to die on 20 March 2023?
845,000 (950,000 – (325,000 – 220,000)) at 40% = £338,000
WHY THE RESIDENCE NIL RATE BAND OF 175000 IS NOT COMPUTED?
Where did you get this question?
Have you read the lecture notes and watched the lecture on IHT?on the practice platform..
yes I read.. I would expect the RNRB to be computed..why are we not making adjustments to reach chargeable death state like subtracting mortage of 160000 by 374000 and funeral expenses and promise to repay son legal fees and all that why are you just putting in the death state value in the question of 950000 ? also for RNRB in question its never mentioned the property as main residence you are assuming that dont assume unless question specifically uses words MAIN residence or only residence . can you clear why other adjustments are discarded mentioned above in death state value ?
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