Testator made gifts of circa £450,000 in 2017 - 2023 (total separate gifts), the biggest gift was for £390,000 in 2017. Am I right in saying that because there is a transferable nil rate band of £325,000 as allowing for a total nil rate band of £650,000, that no tax is payable on the specific gift and therefore no taper relief is available?
If there was no TNRB then I understand taper relief would be available for the 2017 gifts, however I fail to understand why the chargeable value is then added to the IHT400 at box 113 and then used to calculate the total IHT tax payable. How does this work in practice? I know that HMRC will calculate the taper relief available and will confirm what tax is payable by the donee (unless there is wording in the Will to specify that the estate pays the same) however why do we then include it within box 113 and pay tax on it?
Am I right in saying that because there is a transferable nil rate band of £325,000 as allowing for a total nil rate band of £650,000, that no tax is payable on the specific gift and therefore no taper relief is available? Yes - taper relief reduces the tax rate rather than the value and the rate within the NRB/TNRB is already 0%
If there was no TNRB then I understand taper relief would be available for the 2017 gifts, however I fail to understand why the chargeable value is then added to the IHT400 at box 113 and then used to calculate the total IHT tax payable.
Because the value of the gifts is deemed to be part of the estate for inheritance tax and so goes to the IHT calculation on the estate - in particular it will effect whether there is any NRB left over.
How does this work in practice? I know that HMRC will calculate the taper relief available and will confirm what tax is payable by the donee (unless there is wording in the Will to specify that the estate pays the same) however why do we then include it within box 113 and pay tax on it?
The tax is calculated as a single figure and then apportioned between the estate and donee(s). Box 65 in IHT400Calc shows the tax payable by the PRs in order to obtain probate.