The tax paid on the earlier chargeable transfer (
IHTM04027) cannot have increased your
deceased's estate. Therefore you have to ensure that your
calculation of the property your deceased took does not include the
tax on it.
Example
The deceased died in July 2001 having received the entire
free estate of S who died in January 1998. S's death estate, wholly
chargeable, consisted of:
| Lifetime transfers | 250,000 |
| Free estate | 155,000 |
| Settled Property | 58,000 |
| Total chargeable transfer | £463,000 |
The tax on the free estate was £ 62,000. It has all been
paid.
The increase in your deceased's estate was:
| Value of earlier free estate as agreed for IHT | 155,000 |
| Less tax on that value | 62,000 |
| Net value after tax | £ 93,000 |
Where the earlier transfer was on death, in general
