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HMRC internal manual

Inheritance Tax Manual

From
HM Revenue & Customs
Updated
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Attribution process: death estate

Death in February 2002. The deceased is the transferor in the lifetime transfer example (IHTM30312). The death estate is wholly chargeable and consists of:

1 A business dealing in property £300,000
     
2 House £150,000
3 Quoted investments £140,000
  Value of estate for IHT £590,000
  Previous gifts £400,000
    £990,000
  Tax on £990,000 £299,200
  Less tax on £400,000 at death rates -£63,200
  Tax due on estate £236,000
  • Proportion of tax on business (£300,000)(300 ÷ 590) x £236,000 = £120,000

This £120,000 is payable by instalments and as it is a business, although it does not qualify for Business Relief (IHTM25130) because of IHTA84/S105 (3), the instalments are interest free (IHTM30363).

  • Proportion of tax on value of house (£150,000)(150 ÷ 590) x £236,000 = £60,000

This £60,000 is also payable by instalments. The instalments are not interest free as the house is neither agricultural property (IHTM24030) nor part of a business (IHTM25051).

  • Proportion of tax on value of quoted investments (£140,000)(140 ÷ 590) x £236,000 = £56,000

This is payable in one sum.