Tx notes fa22 Final

June 2023 to March 2024 exams
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6. Taper Relief 
If a taxpayer does not survive for 7 years following the PET but does survive for at least 3 years any 
IHT payable on the transfer is reduced by taper relief. The relief is applied to the tax charge as 
follows:
Time from transfer to date of death
Relief
3 – 4 years
20%
4 – 5 years
40%
5 – 6 years
60%
6 – 7 years
80%
(This table is provided in the examination)
Example 2
Dee died on 1 March 2023 with a Chargeable Estate of £500,000 having made the following lifetime 
gifts: 
1 October 2010 
£100,000 
cash to son 
1 June 2011 
£336,000 
cash into a trust 
1 September 2017 
£296,000 
cash to daughter 
Required:
(a)
Calculate the IHT payable on the lifetime gifts when they were made assuming that Dee 
paid any lifetime tax due. 
(b)
Calculate the IHT payable as a result of Dee’s death.
Nil rate bands are as follows: 
From 09/10 £325,000

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June 2023 to March 2024 exams
Watch free ACCA TX lectures
STAGE 3 The death Estate
The death estate comprises all assets held on death at their open MV at that date (known as the 
probate value). 
Any funds held in a pension fund should not be included in the death estate.
If a property held in the estate is mortgaged, the mortgage will reduce the property value if it is a 
repayment or interest only mortgage. Endowment mortgages are not deducted as they are repaid on 
death by the life assurance part of that mortgage. The estate should also include the proceeds of 
any separate life assurance policy on the deceased’s life, not the market value of the policy at the 
date of death.
The value of the estate will be reduced by any legally enforceable debts due at that date e.g. credit 
card bills, plus funeral expenses and by exempt bequests.