Iht

CLAPTON

Gnittih wrote: »

Sorry the case I want to examine is,
A single person with £600k estate, gifts £200k to cousins,and dies 1year later,leaving same cousins to inherit remainder of estate via will.
How is any IHT paid?

the IHT for a single person with a 325,000 IHT allowance (not a widower)

then the tax payable would based on 600,000 i.e.
400,000 directly in the estate and PET (potential exempt transfers) of 200,000 which would be added back into the estate if you die within 7 years of the gifts

so 600,000 - 325000 = 275,000 at 40%
so tax would be
£110,000

the tax would be paid from the estate (i.e. from the 400,000) unless the will says otherwise

CLAPTON

milla wrote: »

Are you asking "Is the estate now £600.000 - £200.000? "


If you are, then I think probably the £200.000 would fall into the taper relief system


http://www.which.co.uk/money/tax/guides/inheritance-tax-explained/inheritance-tax-planning-and-tax-free-gifts/



If tax does become due on a PET, the person who received the PET will be asked to pay the tax. However, the tax due may be reduced because of ‘taper relief’.
This is how taper relief can reduce tax due on PETs:

• If the gift was made less than three years before death, no reduction in tax is due
• If the gift was made three to four years before death, tax is reduced by 20%
• If the gift was made four to five years before death, tax is reduced by 40%
• If the gift was made five to six years before death, tax is reduced by 60%
• If the gift was made six to seven years before death, tax is reduced by 80%

to be absolutely clear taper relief only applies if the 7 years gifts exceed 325,000 and only by the amount over

so 200,000 gifts .... no taper relief
3250,000 gifts no taper relief
400,000 gifts then taper relief on 75,000

Gnittih

CLAPTON wrote: »

to be absolutely clear taper relief only applies if the 7 years gifts exceed 325,000 and only by the amount over

so 200,000 gifts .... no taper relief
3250,000 gifts no taper relief
400,000 gifts then taper relief on 75,000

Surely...taper relief on 200,000, resulting tax paid by cousins
No tax on 325,000
Immediate tax on 75,000, resulting tax at 40% paid by executors.