IHT & Lifetime Gifts (& Taper Relief?)

Tom99

c_lothian wrote: »

Thank you - I was meaning what would be the IHT due on the Lifetime Gifts (I've now edited the post, as originally in question sentence I only asked about Gifts)?

[FONT=Verdana, sans-serif]Using the above answers, one of two possibilities:

[/FONT] [FONT=Verdana, sans-serif]£30,000 * 40% = £12,000 IHT

[/FONT] [FONT=Verdana, sans-serif]Or, following getmore4less suggestion, if you can claim that the £3,000pa gifts for each of 5 years was from normal expenditure:

[/FONT] [FONT=Verdana, sans-serif]£30,000 less 4 x £3,000 exemption (yrs 2 and 4 plus yrs 5 and 3 c/f) * 40% = £7,200 IHT

[/FONT] [FONT=Verdana, sans-serif]You will need to complete sections 20/21/22 of IHT403 to claim that the annual 3 * £1,000pa for 5 years were from normal expenditure, ie surplus income. [/FONT]

c_lothian

Tom99 wrote: »

[FONT=Verdana, sans-serif]Using the above answers, one of two possibilities:

[/FONT] [FONT=Verdana, sans-serif]£30,000 * 40% = £12,000 IHT

[/FONT] [FONT=Verdana, sans-serif]Or, following getmore4less suggestion, if you can claim that the £3,000pa gifts for each of 5 years was from normal expenditure:

[/FONT] [FONT=Verdana, sans-serif]£30,000 less 4 x £3,000 exemption (yrs 2 and 4 plus yrs 5 and 3 c/f) * 40% = £7,200 IHT

[/FONT] [FONT=Verdana, sans-serif]You will need to complete sections 20/21/22 of IHT403 to claim that the annual 3 * £1,000pa for 5 years were from normal expenditure, ie surplus income. [/FONT]

Thank you - so because he didn't gift more than £325k before his death, then Taper Relief doesn't apply?

Tom99

c_lothian wrote: »

Thank you - so because he didn't gift more than £325k before his death, then Taper Relief doesn't apply?

[FONT=Verdana, sans-serif]Yes that's correct. Gifts reduce the nil rate band and only after all the nil rate band has been used by gifts of £325k+ do those excess gifts become taxable and subject to taper relief.[/FONT]
[FONT=Verdana, sans-serif]This is despite the fact that any amount of gift reducing the nil rate band will increase the taxable part of the estate by exactly the same amount as the gift.[/FONT]