Under IHTA84/S69, the rate of charge is a proportion of the
effective rate charged at the last ten year
anniversary (TYA). (
IHTM42083).
Again, the rate values are based on values of the settlement
at the TYA, but you can retain the deduction of any AR or BR
applied against the relevant property. (
IHTM42165)
You must however recalculate the rate
| Recalculated effective rate% | x 3 | = settlement rate % |
| 10 |
Then apply a reduction to reflect the number of quarters that the transferred property has been relevant property since the last TYA. ( IHTM42116)
| Chargeable transfer
(‘loss to the settlement’ after deducting any AR or BR, and grossed as appropriate) ( IHTM42111) | x settlement rate % | = £total tax | |
| Reduction: | Relief as property held for x/40 number of quarters (see IHTM42116) | = £relief | |
| £IHT to pay |
£100,000 land and £60,000 unquoted shares were first
settled on discretionary trusts by Miss B on 5 September 1991. She
made no related settlements but had previously made a transfer of
£20,000 to another discretionary trust in 1989.
At the ten year anniversary on 5 September 2001, the land was
worth £300,000 and the unquoted shares were worth
£200,000. The shares qualified for business property relief.
The TYA inheritance tax charge of £4,680 was paid at the
appropriate time.
Miss B made an addition of £15,000 to the trust in 2002.
On 12 May 2004 the shares were floated on the stock exchange
and were appointed from the trust on 18 May 2004 at a value of
£700,000. At this time they did not qualify for business
property relief, so the chargeable transfer according to the IHT100
was £700,000.
The proportionate charge to pay on the disposal is £2,400 (plus or minus £1).
