Topic: Taxation

Question 1:

 On 5 December 2019, Nicholas makes a gift of £80,000 (after deduction of all relevant exemptions) to a relevant property trust. His only previous chargeable lifetime transfers were in June 2010 (gross chargeable value £200,000) and July 2014 (gross chargeable value £281,000). Calculate the lifetime IHT payable in relation to the £80,000 gift and state the due date of payment:

(a) if the trustees pay the tax           (b) if Nicholas pays the tax.

Question 2:

On 31 March 2013, Martha gave £500,000 to her daughter as a wedding present. On 1 April 2014 she gave £497,000 to a relevant property trust. Martha died on 1 January 2020, having made only these two transfers during her life.

(a) Calculate any lifetime tax due on each of the above transfers and state the due date of payment, assuming that Martha paid this tax herself.

(b) Calculate any further tax due on Martha’s death in relation to these transfers and state the due date of payment. (Assume that there is no unused nil-rate band to be transferred from a previously deceased spouse or civil partner).

Question 3:

 Tony died on 11 July 2019, leaving an estate valued at £900,000. None of the transfers made on his death were exempt from IHT. He had made the following transfers during his lifetime:

                                                                                                                         £

3 May 2011 Gift to relevant property trust (tax paid by trustees)                 113,000

1 July 2012 Gift to daughter                                                                         185,000

1 August 2012 Gift to son                                                                             250,000

10 November 2013 Gift to relevant property trust (tax paid by Tony)           447,000  

Calculate the tax payable as a result of Tony’s death. (Assume that there is no unused nil-rate band to be transferred from a previously deceased spouse or civil partner and that Tony’s residence was not left to a direct descendant).