Taper relief IHT

[Deleted User]

castle96 said:

How to value an estate for Inheritance Tax and report its value: Estimate the estate’s value - GOV.UK (www.gov.uk)

Even the Gov guidance is wrong ! I put in NIL gifts in the last 7 yrs and £326k gifts. The calculator does not make any reference to Taper relief, or various yrs within the 7. It merelyincludes the £326 (1k above "you must have given away > £325k" ) in your total estate. Martin Lewis should include this misheld conception in his show one day

Really can’t make head nor tail of this. Why would there be taper relief if, as you have stated, there are NO gifts within the last seven years? Your second sentence makes no sense!

castle96

I tried 1x with £0 gifts in last 7yrs and 1x with £326k gifts in last 7. The 2nd calc just included £326k in the total estate and made no mention of taper relief. Try it

NannaH

Yes, absolutely No mention of Taper relief or how many years ago within the 7.  Very misleading. 

I tried it with a £1million estate and £400k gifted away. 

[Deleted User]

castle96 said:

I tried 1x with £0 gifts in last 7yrs and 1x with £326k gifts in last 7. The 2nd calc just included £326k in the total estate and made no mention of taper relief. Try it

That’s correct - the £326k is the value of the estate. The calculation does not, at any point, state that it is going to work out the taper relief. It simply states:

How to value an estate for Inheritance Tax and report its value

So - the estate IS valued at £326k. The tax payable, taking into account taper relief, is another matter. 

castle96

I expect a Gov site to be comprehensive. If there is taper relief, this should be part of the calc. to "value... for IHT....", surely. I bet 99% of people assume that any gift during the proceeding 7yrs is partially 'allowed' for IHT relief, not that you have to have given away £325+. As stated, even the Gov site does not inform you of this 

[Deleted User]

NannaH said:

Yes, absolutely No mention of Taper relief or how many years ago within the 7.  Very misleading. 

I tried it with a £1million estate and £400k gifted away. 

The calculator is only designed to calculate the value of the estate and, subsequently, prompts the appropriate action. It does not purport to calculate taper relief. Such a calculator would required individual inputs of each gift including dates.

NannaH

You would expect it to specify that Taper relief
 * may* be available when the gifts exceed the NRB on the page though.
I find the HMRC pages infuriatingly vague and wooly. 

castle96

"Such a calculator would required individual inputs of each gift including dates"  Yes, so it should be so

[Deleted User]

NannaH said:

You would expect it to specify that Taper relief
 * may* be available when the gifts exceed the NRB on the page though.
I find the HMRC pages infuriatingly vague and wooly. 

Possibly - but is is clear at the end. 

Based on your information, the estate value is just over the £325,000 Inheritance Tax threshold. You will need to pay Inheritance Tax.

What you should do next

It really isn’t a calculator at all - simply a guide as to how to proceed further based on assumptions similar to ‘Do you need to complete a tax return?’

[Deleted User]

castle96 said:

I expect a Gov site to be comprehensive. If there is taper relief, this should be part of the calc. to "value... for IHT....", surely. I bet 99% of people assume that any gift during the proceeding 7yrs is partially 'allowed' for IHT relief, not that you have to have given away £325+. As stated, even the Gov site does not inform you of this 

Guess we will have to agree to disagree. The value of the estate in your example is £326000. That is the starting point before all reliefs. 

I completed an estate for an old lady a few years back to made nearly 80 separate gifts in the ten years before she died. The dates all had to be entered one by one - it just has to be done!