IHTM22074 - Tax burden on death: gifts of residue

The deceased has to bear the tax for the estate if they received a gift of the residue.

Example

Sergio died January 2010 leaving an estate of 拢550,000 - no business relief (IHTM25131) or agricultural relief (IHTM24001) was available.

By his Will, legacies totalling 拢200,000 were paid free of tax to chargeable beneficiaries, and the residue went to Marcos, also a chargeable beneficiary. Tax of 拢90,000 was paid.

Marcos dies in July 2011. Because all the legacies were free of tax, Marcos had to bear the tax on the whole estate. So, the net value of the assets received by Marcos was 拢260,000 (Sergio鈥檚 estate of 拢550,000 less legacies and tax (拢200,000 + 拢90,000)).

The quick succession relief calculation is:

(拢260,000 梅 拢550,000) x 拢90,000 x 80% = 拢34,036