IHTM31033 - Assessing: examples of calculations: calculation where there is quick succession relief (QSR)
The facts
Roger died in November 2012 with free estate (Entry A) of 拢200,000, all personal assets.
Roger also had a life interest in a Will Trust (Entry B), which passes on his death. The trust is valued at 拢300,000 at the date of Rogers鈥檚 death.
In his lifetime, Roger made chargeable lifetime gifts of 拢25,000 in June 2009.
There is no unused nil-rate band from the previous death of a spouse or civil partner to carry over to Roger鈥檚 estate.
QSR of 拢10,000 is due against the tax payable on Roger鈥檚 estate.
Calculate the available nil-rate band
The Inheritance Tax nil-rate band at the date Roger died is 拢325,000. There is no unused nil-rate band to add to this so the available nil-rate band is 拢325,000
Apply the available nil-rate band to any lifetime transfers first
The available nil rate band of 拢325,000 is used against the lifetime transfers of 拢25,000 first. This leaves 拢300,000 to be used against the death estate.
Find the chargeable value of the estate at the date of death
The chargeable value of the death estate, after deducting liabilities, exemptions and reliefs is 拢200,000 free estate plus 拢300,000 Will trust = 拢500,000.
Apportion the available nil-rate band
Because there is more than one entry (IHTM31011) we must apportion the available nil rate band of 拢300,000 between them, before we can work out the tax.
Entry A
拢300,000 脳 拢200,000 梅 拢500,000 = 拢120,000
Entry B
拢300,000 脳 拢300,000 梅 拢500,000 = 拢180,000
Calculate the tax on Entries A and B:
Entry A
拢200,000 - 拢120,000 脳 40% = 拢32,000
Entry B
拢300,000 - 拢180,000 脳 40% = 拢48,000.
Apportion the QSR between the entries
Entry A
拢10,000 脳 拢32,000 梅 拢80,000 = 拢4,000
Entry B
拢10,000 脳 拢48,000 梅 拢80,000 = 拢6,000
Calculations
Here we will raise death estate calculations for:
- 拢28,000 (拢32,000 - 拢4,000 QSR) at Entry A
- 拢42,000 (拢48,000 - 拢6,000 QSR) at Entry B