Test your understanding
(1) Kathy made a gift of 1,000 £1 ordinary shares in ACE Ltd, an unquoted investment company. Before the transfer Kathy owned 5,500 shares out of ACE Ltd’s issued share capital of 10,000 £1 ordinary shares. ACE Ltd’s shares are worth £16 each for a holding of 10%, £21 each for a holding of 45%, and £36 each for a holding of 55%. What value has been transferred by Kathy?
(2) Malcolm died on 2 March 2014 leaving an estate valued at £380,000. On 20 June 2006 Malcolm had made a gift of £72,000 to his son, and on 17 December 2008 he had made a gift of £146,000 to his daughter. These figures are after deducting available exemptions. What is the IHT liability in respect of Malcolm’s estate?
(3) Wong died on 4 January 2014. When his wife died on 3 August 2007, only 30% of her nil rate band of £300,000 for the tax year 2007-08 was used. How much nil rate band is available against Wong’s estate?
(4) On 22 May 2012 Winston made a gift of £4,400 to his daughter, and on 7 September 2013 he made a gift of £7,200 to his daughter. What is the value of the PET made on 7 September 2013 to Winston’s daughter?
(5) On 12 June 2013 Arnold made a gift of £440,000 to a trust (this figure is after deducting available exemptions). Arnold will pay the IHT arising from the gift. He has not made any previous lifetime gifts. What is Arnold’s lifetime IHT liability in respect of the gift?
(6) On 20 November 2013 Alex made a gift to a trust, and this resulted in a lifetime IHT liability of £46,000. What is the due date for this liability?
A 30 April 2014
B 20 May 2014
C 31 May 2014
D 31 January 2014
(7) Why might it be beneficial for IHT purposes to skip a generation so that gifts are made to grandchildren rather than children?
A To maximise the use of the nil rate band
B Because there is a greater chance of the gift becoming exempt
C To avoid a double charge to IHT
D Because it postpones the payment of the IHT liability