I10.219 Burden of tax—Examples
These examples illustrate the points made in I10.209–I10.218.
Example 1—Calculating the burden of tax
X died on 5 June 2019 owning the following assets:
Land in the UK worth £280,000, left to A.
Foreign property worth £100,000, left to B.
Foreign property worth £50,000, left to C. The legacy was declared by X's Will to be free of IHT.
Other free estate in the UK valued at £330,000. X's Will left pecuniary legacies totalling £120,000.
X was also the joint owner of UK property, his share of which was valued at £40,000.
X had made no lifetime gifts, and no exemptions or reliefs were available on his death.
The IHT payable on X's death is:
|Foreign property subject to tax||100,000|
|Foreign property free of tax||50,000|
|Other UK assets||330,000|
|Less: Nil rate band||(325,000)|
|IHT payable @ 40%||190,000|
This gives an estate rate of 23.75% (ie 190,000 / 800,000).
The IHT on the UK land, the foreign property left free of tax, and the pecuniary legacies is borne by the residue. This means that the recipient receives the asset net of tax, so the estate rate must be grossed up (ie use 23.75/100–23.75%) to find the IHT due.
The tax on the foreign property subject to tax is borne by the specific legatee, and the tax on the jointly held property is borne by the other joint owner, ie these are received gross (ie before tax) by the recipient.
The IHT is attributable as follows:
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