Hello. I have a Will where the Testator has passed recently. There is no widow, he was single.
The Testator has left in his Will, specific monetary gifts of a large amount to various family members and the residuary estate to various charities. This qualifies the 10% test and therefore the 36% IHT applies.
Could I ask, how do I calculate IHT here for the estate and which element of the estate pays the IHT? I was under the impression it would only be the specific monetary gifts in the Will which would be liable for the IHT?
I think that the pecuniary gifts would be free from Inheritance Tax unless the Will specifically says ‘subject to tax’. If the gifts are free from Inheritance Tax, then the tax would need to be paid from the residuary estate. It sounds like a Grossing Up calculation would need to be done too, to ensure that the right amount of tax is paid, seeing as there are both exempt and non-exempt beneficiaries. There is a Grossing Up Calculator on the Gov website which may help.
I agree any NRB has to be recognised; but to my simple mind, isn’t the liability then 36/64ths of the [the free of tax legacies less the NRB]?
Thus, if the available NRB is £325k, the free-of-tax legacies are £925k and the estate is £5m, the IHT would be £360k and the residue would be £3.715m [£5m-£925k-£360k].
Confidentiality: This email message and any attachments may contain confidential and/or legally privileged information. It is intended for the addressee and if you are not the intended recipient you should not copy or use the contents nor disclose them to anybody else. If you are not the intended recipient, please notify the sender by return of email immediately and delete this message and its attachment(s) together with all copies in whatever form.
I must admit that I had recently advised on an estate which had only Free of Tax legacies and a substantial (well over 10%) residue to charity, where I had considered the IHT calculation.
Confidentiality: This email message and any attachments may contain confidential and/or legally privileged information. It is intended for the addressee and if you are not the intended recipient you should not copy or use the contents nor disclose them to anybody else. If you are not the intended recipient, please notify the sender by return of email immediately and delete this message and its attachment(s) together with all copies in whatever form.
|