INHERITANCE TAX
WORKSHOP TASK 1
Assume it is the start of October 2018. You are instructed by Donald Mallin, a
wealthy local businessman, who has just retired. Having reviewed his financial
position, he recently decided to make the following gifts for the benefit of his children:
He gave £300,000 cash to his daughter, Maria, on her 35th birthday at the
start of September 2018.
In June 2019 he will give £350,000 cash to a discretionary trust for the
benefit of his son, James (who will then be 30), and James’ family. Donald
does not want to give the cash directly to James as he is not good with
money.
Donald has made cash gifts of £3,000 on 6 April each tax year since the introduction
of IHT to use up his annual exemptions. He will continue to do so. Apart from these
gifts he also made a gift of £200,000 cash to a discretionary trust for the benefit of
his eldest daughter, Judith, and her family in October 2012.
Assume that IHT rates, reliefs, exemptions, bands and allowances for past and
future years are the same as for this tax year.
(a) Explain whether any IHT was payable when Donald made the transfers in
(i) October 2012; and
(ii) September 2018?
(b) Advise Donald on whether any IHT will be payable when he makes the transfer
in June 2019.
Note: You may assume that the transferees will pay any IHT that is payable as a
result of the above transfers.
1
WORKSHOP TASK 1
Assume it is the start of October 2018. You are instructed by Donald Mallin, a
wealthy local businessman, who has just retired. Having reviewed his financial
position, he recently decided to make the following gifts for the benefit of his children:
He gave £300,000 cash to his daughter, Maria, on her 35th birthday at the
start of September 2018.
In June 2019 he will give £350,000 cash to a discretionary trust for the
benefit of his son, James (who will then be 30), and James’ family. Donald
does not want to give the cash directly to James as he is not good with
money.
Donald has made cash gifts of £3,000 on 6 April each tax year since the introduction
of IHT to use up his annual exemptions. He will continue to do so. Apart from these
gifts he also made a gift of £200,000 cash to a discretionary trust for the benefit of
his eldest daughter, Judith, and her family in October 2012.
Assume that IHT rates, reliefs, exemptions, bands and allowances for past and
future years are the same as for this tax year.
(a) Explain whether any IHT was payable when Donald made the transfers in
(i) October 2012; and
(ii) September 2018?
(b) Advise Donald on whether any IHT will be payable when he makes the transfer
in June 2019.
Note: You may assume that the transferees will pay any IHT that is payable as a
result of the above transfers.
1
