Tx notes fa22 Final

June 2023 to March 2024 exams
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Example 1
On 16
th
July 2008, Betty created a discretionary trust and gave the trustees £320,000 in cash and 
she agreed to pay the IHT on this transfer. 
On 1 August 2014, she gave £120,000 to her son. 
On 10
th
September 2014, Betty gave a further £338,000 in cash to the trustees. The trustees agreed 
to pay any IHT due on this transfer. 
Assuming Betty has made no other lifetime transfers, calculate the IHT due on each transfer 
and the amount of the gross chargeable transfers carried forward.
Relevant NRBs are as follows: 
2008/09 – £312,000 
2014/15 – £325,000
STAGE 2: additional tax on lifetime gifts as a result of death 
When an individual dies there may be additional tax to pay on any lifetime gifts within the previous 7 
years, as result of their death.
Death tax is due on any lifetime transfers made within seven years of death: 
๏
PETs become chargeable for the first time 
๏
Additional tax may be due on CLTs. 
The recipient (donee or trustees of trust) is liable to pay the death tax due on a lifetime gift. 
Calculating death tax
Death tax is calculated on each gift separately, in chronological order, as follows: 
(1)
Identify all gifts within seven years of death. 
(2)
Calculate the gross chargeable amount of each gift and any lifetime tax paid (section 3 above).
(3)
Calculate the amount of NRB available. 
(4)
Calculate the death tax on the excess at 40%. 
(5)
Calculate and deduct any taper relief available. 
(6)
For CLTs, deduct any lifetime IHT paid. 
(7)
If required, state who will pay and the due date for payment. 

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