ExpertEasy2 marksMultiple Choice
ACCA · Question 28 · Inheritance tax
Section B - Case 3 (Oakfield Farms)
Arthur also made a Potentially Exempt Transfer (PET) of £100,000 to his nephew 4 years and 2 months before his death.
What percentage of taper relief will apply to the IHT payable on this PET as a result of Arthur's death?
Section B - Case 3 (Oakfield Farms)
Arthur also made a Potentially Exempt Transfer (PET) of £100,000 to his nephew 4 years and 2 months before his death.
What percentage of taper relief will apply to the IHT payable on this PET as a result of Arthur's death?
Answer options:
A.
0%
B.
20%
C.
40%
D.
60%
How to approach this question
Recall the taper relief table: 0-3 yrs (0%), 3-4 yrs (20%), 4-5 yrs (40%), 5-6 yrs (60%), 6-7 yrs (80%).
Full Answer
C.40%✓ Correct
Taper relief reduces the amount of IHT payable on a lifetime gift if the donor survives for at least three years after making the gift. The relief scale is: 3-4 years (20%), 4-5 years (40%), 5-6 years (60%), 6-7 years (80%). Since Arthur survived 4 years and 2 months, the tax is reduced by 40%.
Common mistakes
Applying the taper relief percentage to the value of the gift rather than the tax, or using the wrong percentage band.
Practice the full ACCA TX — Taxation Practice Exam 2
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