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