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Hi guys,
I am a bit confused with QSR on IHT. I know it is only a minor point so I must be missing something obvious. Could anyone please look at my question/answer below and give me an idea if I am on the right track or not?
Q:
Jane died 20/11/13, leaving shares worth £94,800 in the death estate. These had been inherited as a specific gift on the death of her sister on 10/08/11 when they were valued at £68,000. The sister’s executor paid IHT of £54,000 on an estate valued at £360,000.A:
I know I need to use the formula:
% based on time elapsed between deaths x net/gross legacy x IHT originally paidDo I assume the IHT originally paid on the shares is proportionate to the total IHT on the sisters estate? so 54/360 = 15%? so IHT of 68000 x 15% = 10200?
So I have the QSR calc as 60% x 68000/78200 x 10200 = 5321.
I have no idea if I have understood this or not. Any comments appreciated!
Hello,
I presume you are attempting the BPP course exam 1? I came to the same point and came to the exact same conclusion as you.
Calculate the sister’s estate rate (54/360 = 15%) and apply that to the gift to work out the net value Jane actually received and then apply the formula to calculate the QS – £5321.
Could be wrong, but I assumed the same 🙂
Hello James,
Thanks for your reply, it’s reassuring when someone else gets the same answer. Happily we got this one right for one whole mark! Although I can’t say the same for the rest of the course exam. Best of luck to you with the second one, I’m about to get started on it…
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