Inheritance Tax Manual

IHTM30312 - Attribution process: lifetime transfers

In May 2000 Terri settles the following property on relevant property trust (IHTM42161), the transferee (IHTM30244) paying the tax

• £160,000 cash

and

• 20,000 shares in XYZ Ltd, an unquoted company (the value is £240,000).

The value transferred by the transfer, which is wholly chargeable, is £400,000.  The part of this value attributable to

• the shares is (120,000 ÷ 200,000) or 3/5
• the cash is (80,000 ÷ 200,000) or 2/5.

The part attributable to the shares qualifies for instalments because

• the transferee is paying the tax
• the part of the value transferred attributable to the shares exceeds £20,000, and
• the shares represent more than 10% of the company바카라 사이트™s share capital (IHTM30256).

The calculation of the tax immediately payable (there being no previous cumulative total) is:

 

Value                                                         Lifetime tax

£400,000 transfer                            £33,200             which splits thus:

2/5 attributable to cash                  £13,280              payable in one sum

3/5 attributable to shares              £19,920              payable by instalments. 

 

The transferor dies in February 2002.  The additional tax on the lifetime transfer is:

Tax at February 2002 full rate                   £63,200

Less tax as above                                              £33,200

Additional tax                                                     £30,000

 

As the shares are still held by the transferee and remain unquoted at the death, instalments are available for £18,000 - i.e. the 3/5 part of the £30,000 attributable to the shares.