Noah is UK resident and UK domiciled. Noah was the sole beneficiary of his wife Emmas will
Question:
Noah is UK resident and UK domiciled. Noah was the sole beneficiary of his wife Emma’s will when Emma died in August 2014. No lifetime gifts have been made by either Emma or Noah.
Noah is in poor health, he is not expected to live for more than four years.
Noah owns the following assets with current market values as stated:
· His home in London worth ......................................£450,000.
· A vintage car valued at ...............................................£37,000.
· Personal chattels and cash balances of .................£224,000.
· Gateway House, a commercial property, worth ....£700,000.
Noah is considering giving Gateway House to his nephew Gerry in November 2020 to reduce the inheritance tax payable on his death.
· 4,000 shares in Chalk plc, an investment company, quoted at 208-214p, with marked bargains of 201p, 209p and 219p.
The value of all assets is expected to remain the same for the next four years with the exception of Gateway House and Noah's home in London. These are both expected to stay at the same value for the rest of 2019 and 2020, but will increase in value by 10% by March 2024.
On his death, Noah will leave his estate to his nephew Daniel.
Requirement
Assume Noah dies in March 2024. Noah is considering two options:
Option 1: Noah makes the lifetime gift of Gateway House to Daniel in November 2020 or alternatively;
Option 2: Does not make the lifetime gift and still owns Gateway House at his death in March 2024,
Calculate the inheritance tax payable as a result of his death under each option. Show your death estate calculations in two columns 'lifetime gift' and 'no lifetime gift'.
Taxation for Decision Makers 2014
ISBN: 9781118654545
6th edition
Authors: Shirley Dennis Escoffier, Karen Fortin