Attribution process: lifetime transfers
- £160,000 cash
- 20,000 shares in XYZ Ltd, an unquoted company (the value is £240,000).
The value transferred by the transfer, which is wholly chargeable, is £400,000. The part of this value attributable to
- the shares is (120,000 ( 200,000) or 3/5
- the cash is (80,000 ( 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 £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:
Lifetime tax on the transfer of £400,000 = £33,200. This splits into:
- Two fifths attributable to cash = £13,280 (payable in one sum)
- Three fifths attributable to shares = £19,920 (payable by instalments).
The transferor dies in February 2002. The additional tax on the lifetime transfer is:
The tax at February 2002 at the full rate = £63,200 less tax (as shown above) - £33,200 = £30,000.
As the shares are still held by the transferee and remain unquoted at the death, instalments are available for £18,000 - i.e. the 3/5 part of the £30,000 attributable to the shares.