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Where Taxpayers and Advisers Meet

IHT calculations

Loobylou
Posts:5
Joined:Thu Oct 17, 2019 9:33 pm
IHT calculations

Postby Loobylou » Fri Oct 18, 2019 6:10 pm

Hi
Don’t know much about IHT calculations I’m totally confused.

Need to work out IHT for following

Nil band rate of £325000 used up

£400k house
£300k cash/quoted shares
£100k share in business partnership (over 2 years)
£5k liabilities

Residue to be split between relative (cousin) and charity

Really not sure how to do working out for IHT purposes any help would be greatly received. I have been on HMRC website and I’m just even more confused.

Thanks :D

Loobylou
Posts:5
Joined:Thu Oct 17, 2019 9:33 pm

Re: IHT calculations

Postby Loobylou » Sun Oct 20, 2019 9:19 am

Hi

Is there anyone on the forum who could assist me with this please?

Thanks

Loobylou
Posts:5
Joined:Thu Oct 17, 2019 9:33 pm

Re: IHT calculations

Postby Loobylou » Sun Oct 20, 2019 9:20 am

Hi

Is there anyone on the forum who could assist me with this please?

Thanks

AnthonyR
Posts:322
Joined:Wed Feb 08, 2017 2:33 pm

Re: IHT calculations

Postby AnthonyR » Mon Oct 21, 2019 11:09 am

First things first, this is a forum giving general guidance. This is not formal advice! I would recommend you pay for some advice as there are a number of unclear elements and the below is simply a guide to the route you might want to take:

When you say NRB is used up, is that on lifetime gifts? Transfers into trust? Was there more than £325,000 of either because if so this may trigger additional tax. There's no RNRB as nothing left to kids.

Assuming the NRB is exactly used up (ie £325,000 gifted in the past 7 years) this means that you have a net estate of £795,000.

You say the residue is split equally between cousin and charity, I assume this is 50:50. I assume that although you say the residue you mean the entire estate. The residue is what's left after other gifts and you don't mention any other gifts.

It's also worth noting that without an agreement to the contrary the business partnership will revert to the other partner automatically. However, I'm going to assume that there is a partnership agreement in place.

As such, the charity gets £397,500 and the cousin gets £397,500.

The gift to charity is exempt from IHT. So no tax on that part.

Assuming the partnership is a trading business then this should qualify for Business Relief at 100% (get this checked by a specialist - particularly with the point above about the partnership agreement).

This gives total exemptions of £497,500.

This leaves £297,500 subject to IHT. However as more than 10% of the estate went to charity then you get a reduced rate of IHT of 36% meaning the IHT due is £107,100.

However, coming back to my first point, TAKE ADVICE. Particularly if you are the executor because if you distribute the assets to the cousin/charity and it turns out you got it wrong and HMRC want more tax you are personally liable. You might be able to recover it from the beneficiaries, but potentially not without an expensive battle.
Anthony Rogers LLB CTA TEP
Fusion Partners LLP
anthony@fusionpartners.co.uk

Loobylou
Posts:5
Joined:Thu Oct 17, 2019 9:33 pm

Re: IHT calculations

Postby Loobylou » Mon Oct 21, 2019 4:35 pm

Thank you so much Anthony it has really helped. I will certainly be looking for some legal advice.

Many thanks


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