I7.195 BPR clawback—examples

IHT, trusts and estates

I7.195 BPR clawback—examples

I7.195 BPR clawback—examples

Example 1—simple clawback on PET

A makes a potentially exempt transfer of a 10% holding of unquoted shares in a trading company on 8 August 2015 to B. He had made chargeable transfers of £315,000 in the seven years before this transfer.

In January 2017 B gives the 10% to C.

A dies on 5 February 2018.

The diminution in value of A's estate by virtue of the transfer of the 10% holding was £30,000.

The IHT on the transfer to B (calculated at the tax rates at A's death):

Transfer (no BPR)30,000
Deduct: nil rate band (reduced by previous CLTs)(10,000)
Transfer and tax on it£20,000£8,000

Note that if B had died before A, the BPR on that holding would have been available when calculating the IHT on the transfer from A to B.

Example 2—partial clawback

D makes a potentially exempt transfer of his 20% holding of shares in an unquoted trading company X Ltd on 1 May 2017 to E. The diminution in the value of D's estate was £160,000.

D had made chargeable transfers of £315,000 within the seven years before the gift, and had held the shares for many years.

On 9 December 2017 E sold a 5% holding of the same shares for £22,000.


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