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sir, could you please clarify if the rate of 25% is still relevant to the cases when the settlor’s paying the tax? because I can’t see the info about it on https://www.gov.uk/guidance/trusts-and-inheritance-tax#relevant-property
it says ‘If the trustees pay, the rate of tax is 20%. If the settlor pays the Inheritance Tax instead of the trustee, this means there will be an increased loss from the settlor’s estate. The amount of tax due will therefore increase. These calculations are complex.’
I just could find the calculation of IHT upon the death of a settlor in your notes. is it essential for passing the exam?
correction: I’ve just found the calculation, it’s in Example 1 of Chapter 23, sorry. but the question about 25% is still actual for me.
Victoria you should not be wasting your time looking at the HMRC website! Your time should be given over to working through the OT notes in conjunction with the relevant lectures where what you need to know for this exam is explained. Once done you should then use an exam kit from one of the approved providers to practice the techniques.
If the donor pays the lifetime tax on a lifetime transfer (CLT) then you do indeed apply the 25% rate to any amount of that CLT that exceeds the then available nil rate band. If the trustees pay then the gross 20% rate is applied to the same excess above the available nil rate band. Yes you DO need to know this.
I think you’re right. it’s just I always feel myself more comfortable getting a bit broader view. but I should value time, I know that. particularly now, with only one month left to the exam.
actually, I’ve completely figured out IHT by now, so I’ll assuredly be able to get marks at least on this one 🙂