I have finally understood (thanks to this forum) that taper relief on gifts only applies if the sum total of the gifts (in the 7 years) EXCEEDs the available NRB.
Does this also apply to a CLT (a transfer that was made into a discretionary trust during the deceased's lifetime)?
Here is my position.
In June 2011 mother (settlor) placed £325K into a discretionary trust (in the form of an onshore bond, kind of investment).
And hoped to live 7 years more so that this sum would fall outside her estate.
In the 2013/14 tax year she gave away 60K
In the 2014/15 tax year she gave away 15K
In the 2015/16 tax year she gave away 17K
In the 2016/17 tax year she gave away 108K
(these are all over and above her annual IHT free entitlements, like 3K and £250 etc.)
So, Total gifts made in this period = £200K in addition to the CLT of £325k into the trust in 2011.
She died last month, 6 years and 3 months short of the 7 year mark since gifting into the trust.
The NRB due to her estate is 325 + 305 (of my father-also now dead) = 630
(I knowthe estate can also benefit from RNRB and TRNRB but I'm leaving those out of this equation, for simplicity, as form IHT400 actually sets them apart a little, and the end result is the same )
So my question is, to calculate how much of the £630k NRB is "used up" - do I add 325K to 200K = 525K ?
Leaving me only 630-525= 105K of NRB left to set against the remaining assets in the estate?
If so, it would seem that the whole purpose of the CLT has become null and void, since the 7 year mark was not reached.
If the 325k does not enjoy any tapering "calculation" either, it seems for the sake of a few months, all this IHT planning came to nought.
Have I understood this correctly?
thanks for any advice