IHTM30312 - Attribution process: lifetime transfers

In May 2000 Terri settles the following property on relevant property trust (IHTM42161), the transferee (IHTM30244) paying the tax

  • Β£160,000 cash

and

  • 20,000 shares in XYZ Ltd, an unquoted company (the value is Β£240,000).

The value transferred by the transfer, which is wholly chargeable, is Β£400,000.Μύ The part of this value attributable to

  • the shares is (120,000 Γ· 200,000) or 3/5
  • the cash is (80,000 Γ· 200,000) or 2/5.

The part attributable to the shares qualifies for instalments because

  • the transferee is paying the tax
  • the part of the value transferred attributable to the shares exceeds Β£20,000, and
  • the shares represent more than 10% of the company’s share capital (IHTM30256).

The calculation of the tax immediately payable (there being no previous cumulative total) is:

Μύ

ValueΜύΜύΜύΜύΜύΜύΜύΜύΜύΜύΜύΜύΜύΜύΜύΜύΜύΜύΜύΜύΜύΜύΜύΜύΜύΜύΜύΜύΜύΜύΜύΜύΜύΜύΜύΜύΜύΜύΜύΜύΜύΜύΜύΜύΜύΜύΜύΜύΜύΜύΜύΜύΜύΜύΜύΜύ Lifetime tax

Β£400,000 transferΜύΜύΜύΜύΜύΜύΜύΜύΜύΜύΜύΜύΜύΜύΜύΜύΜύΜύΜύΜύΜύΜύΜύΜύΜύΜύΜύ Β£33,200ΜύΜύΜύΜύΜύΜύΜύΜύΜύΜύΜύΜύ which splits thus:

2/5 attributable to cashΜύΜύΜύΜύΜύΜύΜύΜύΜύΜύΜύΜύΜύΜύΜύΜύΜύΜύΒ£13,280ΜύΜύΜύΜύΜύΜύΜύΜύΜύΜύΜύΜύΜύ payable in one sum

3/5 attributable to sharesΜύΜύΜύΜύΜύΜύΜύΜύΜύΜύΜύΜύΜύ Β£19,920ΜύΜύΜύΜύΜύΜύΜύΜύΜύΜύΜύΜύΜύ payable by instalments.Μύ

Μύ

The transferor dies in February 2002.Μύ The additional tax on the lifetime transfer is:

Tax at February 2002 full rateΜύΜύΜύΜύΜύΜύΜύΜύΜύΜύΜύΜύΜύΜύΜύΜύΜύΜύ Β£63,200

Less tax as aboveΜύΜύΜύΜύΜύΜύΜύΜύΜύΜύΜύΜύΜύΜύΜύΜύΜύΜύΜύΜύΜύΜύΜύΜύΜύΜύΜύΜύΜύΜύΜύΜύΜύΜύΜύΜύΜύΜύΜύΜύΜύΜύΜύΜύΜύ Β£33,200

Additional taxΜύΜύΜύΜύΜύΜύΜύΜύΜύΜύΜύΜύΜύΜύΜύΜύΜύΜύΜύΜύΜύΜύΜύΜύΜύΜύΜύΜύΜύΜύΜύΜύΜύΜύΜύΜύΜύΜύΜύΜύΜύΜύΜύΜύΜύΜύΜύΜύΜύΜύΜύΜύΜύΒ£30,000

Μύ

As the shares are still held by the transferee and remain unquoted at the death, instalments are available for Β£18,000 - i.e. the 3/5 part of the Β£30,000 attributable to the shares.

Μύ