ARTHUR DIES IN JULY 2020 LEAVING EVERYTHING TO HIS SON, DEREK. DEREK
HAS PROVIDED A LIST OF ASSETS FOR ARTHUR MADE UP OF A HOUSE
WORTH £400,000, A PORTFOLIO OF QUOTED SHARES WORTH £60,000, AN
INSURANCE POLICY PAYING OUT £90,000 WHICH HE ASSIGNED TO DEREK 9
YEARS AGO AND BANK ACCOUNTS WITH BALANCES TOTALLING £32,000. HE
HAD CREDIT CARD BILLS AND UTILITIES BILLS UNPAID, AMOUNTING TO
£8,000. ARTHUR'S WIFE, MILLY, DIED TEN YEARS AGO, LEAVING ALL HER
ESTATE TO ARTHUR. NEITHER ARTHUR NOR MILLY MADE ANY LIFETIME GIFTS
(APART FROM THE ASSIGNMENT OF THE INSURANCE POLICY MENTIONED
ABOVE).
STEP 1 – IDENTIFY DEATH ESTATE
VALUE OF TRANSFER
STEP 2 – VALUE OF VALUE OF ESTATE:
TRANSFER HOUSE - £400,000
SHARES - £60,000
BANK ACCOUNTS - £32,000
LESS UNPAID BILLS – (£8,000)
£484,000
[NB: THE INSURANCE POLICY WAS ASSIGNED TO DEREK, SO
ARTHUR WAS NOT BENEFICIALLY ENTITLED TO IT AT THE DATE
OF HIS DEATH. IT IS THEREFORE NOT INCLUDED IN THE VALUE
OF HIS ESTATE].
STEP 3 – EXEMPTIONS £484,000 – THIS IS THE AMOUNT CHARGEABLE TO IHT AS
AND RELIEFS NONE OF THE ASSETS IN THE ESTATE QUALIFIED FOR ANY
RELIEF/EXEMPTIONS.
NEITHER ARTHER NOR MILLY HAD MADE ANY LIFETIME GIFTS
STEP 4 – CALCULATE THAT USED THEIR RESPECTIVE NIL RATE BANDS (THE
TAX ASSIGNMENT OF THE INSURANCE POLICY BY ARTHUR AT ITS
, SURRENDER VALUE AT THE TIME WAS OVER 7 YEARS BEFORE
HIS DEATH AND SO, BECAME EXEMPT).
AS ARTHUR’S HOUSE PASSES TO HIS SON, AUTHUR’S ESTATE
QUALIFIES FOR HIS OWN RESIDENCE NIL RATE BAND AND
TAKES THE BENEFIT OF THE UNUSED RESIDENCE NIL RATE
BAND OF HIS SPOUSE, MILLY.
ARTHER’S ESTATE THEREFORE QUALIFIES FOR A 100% UPLIFT
IN THE LEVEL OF HIS RESIDENCE NIL RATE BAND INCREASING
IT TO £350,000 (£175,000 X 2).
ARTHUR’S ESTATE CAN TAKE THE BENEFIT NOT ONLY OF HIS
OWN NIL RATE BAND BUT ALSO THAT OF MILLY’S. ARTHUR’S
ESTATE THEREFORE QUALIFIES FOR A 100% UPLIFT IN THE
LEVEL OF NIL RATE BAND, INCREASING IT TO £650,000
(£325,000 X 2).
THE WHOLE OF HIS ESTATE IS THEREFORE, COVERED.
NO IHT IS DUE ON ARTHUR’S ESTATE.
HAS PROVIDED A LIST OF ASSETS FOR ARTHUR MADE UP OF A HOUSE
WORTH £400,000, A PORTFOLIO OF QUOTED SHARES WORTH £60,000, AN
INSURANCE POLICY PAYING OUT £90,000 WHICH HE ASSIGNED TO DEREK 9
YEARS AGO AND BANK ACCOUNTS WITH BALANCES TOTALLING £32,000. HE
HAD CREDIT CARD BILLS AND UTILITIES BILLS UNPAID, AMOUNTING TO
£8,000. ARTHUR'S WIFE, MILLY, DIED TEN YEARS AGO, LEAVING ALL HER
ESTATE TO ARTHUR. NEITHER ARTHUR NOR MILLY MADE ANY LIFETIME GIFTS
(APART FROM THE ASSIGNMENT OF THE INSURANCE POLICY MENTIONED
ABOVE).
STEP 1 – IDENTIFY DEATH ESTATE
VALUE OF TRANSFER
STEP 2 – VALUE OF VALUE OF ESTATE:
TRANSFER HOUSE - £400,000
SHARES - £60,000
BANK ACCOUNTS - £32,000
LESS UNPAID BILLS – (£8,000)
£484,000
[NB: THE INSURANCE POLICY WAS ASSIGNED TO DEREK, SO
ARTHUR WAS NOT BENEFICIALLY ENTITLED TO IT AT THE DATE
OF HIS DEATH. IT IS THEREFORE NOT INCLUDED IN THE VALUE
OF HIS ESTATE].
STEP 3 – EXEMPTIONS £484,000 – THIS IS THE AMOUNT CHARGEABLE TO IHT AS
AND RELIEFS NONE OF THE ASSETS IN THE ESTATE QUALIFIED FOR ANY
RELIEF/EXEMPTIONS.
NEITHER ARTHER NOR MILLY HAD MADE ANY LIFETIME GIFTS
STEP 4 – CALCULATE THAT USED THEIR RESPECTIVE NIL RATE BANDS (THE
TAX ASSIGNMENT OF THE INSURANCE POLICY BY ARTHUR AT ITS
, SURRENDER VALUE AT THE TIME WAS OVER 7 YEARS BEFORE
HIS DEATH AND SO, BECAME EXEMPT).
AS ARTHUR’S HOUSE PASSES TO HIS SON, AUTHUR’S ESTATE
QUALIFIES FOR HIS OWN RESIDENCE NIL RATE BAND AND
TAKES THE BENEFIT OF THE UNUSED RESIDENCE NIL RATE
BAND OF HIS SPOUSE, MILLY.
ARTHER’S ESTATE THEREFORE QUALIFIES FOR A 100% UPLIFT
IN THE LEVEL OF HIS RESIDENCE NIL RATE BAND INCREASING
IT TO £350,000 (£175,000 X 2).
ARTHUR’S ESTATE CAN TAKE THE BENEFIT NOT ONLY OF HIS
OWN NIL RATE BAND BUT ALSO THAT OF MILLY’S. ARTHUR’S
ESTATE THEREFORE QUALIFIES FOR A 100% UPLIFT IN THE
LEVEL OF NIL RATE BAND, INCREASING IT TO £650,000
(£325,000 X 2).
THE WHOLE OF HIS ESTATE IS THEREFORE, COVERED.
NO IHT IS DUE ON ARTHUR’S ESTATE.
