IHTM29120 - Calculating yield-straightforward cases with yield amendments only
Example 1
The following example is a straightforward example of a calculation where all the adjustments to be recorded are adjustments to yield
The deceased died on 15/6/2006. Under the will the house passes to the daughter (free of tax). Half of the residue is charity exempt.
IHT intervention leads to an uplift of £25,000 in the value of the chattels.
As initially assessed:
| Entry A | ||
| House | + | £350,000 |
| Household & personal goods | + | £100,000 |
| Other assets | + | £400,000 |
| Less Charity exemption | - | £201,608 |
| Tax | = | £145,357 |
As finally assessed:
| Entry A | ||
| House | + | £350,000 |
| Household & personal goods | + | £125,000 |
| Other assets | + | £400,000 |
| Less Charity exemption | - | £213,073 |
| Tax | = | £150,771 |
The difference in overall tax = £5,294
The yield adjustments are :
Increase/ Decrease
| Entry A | Household & personal goods | + £25,000 |
| Entry A | Charity Exemption | - £11,465 |
Yield is calculated as 40% x (£25,000 - £11,465) = £5,414
Note
The initially assessed figures included a reduction to the exemption by way of a grossing calculation assessed and paid Pre-Grant. Any adjustments made Pre-Grant should be reported by FACET and not be included in the yield record. If this had not been handled in Pre-Grant, we would include the grossing adjustments on the yield record.
