(1) C The value of Kathy’s shares held before the transfer is £198,000 (5,500 x £36), and the value held after the transfer is £94,500 (4,500 x £21), so the value transferred is £103,500 (198,000 – 94,500).
(2) A The PET made on 20 June 2007 is exempt from IHT as it was made more than seven years before the date of Malcolm’s death. The PET made on 17 December 2009 utilises £146,000 of the nil rate band, so only £179,000 (325,000 – 146,000) is available against the Malcolm’s estate. The IHT liability is therefore £80,400 (201,000 (380,000 – 179,000) at 40%).
(3) A Wong’s personal representatives can claim the wife’s unused nil rate band of £227,500 (325,000 x 70%), so the amount of nil rate band available is therefore £552,500 (325,000 + 227,500).
(4) D The gift on 22 May 2013 utilises all of Winston’s annual exemption for 2013–14. Therefore, the value of the PET made on 7 September 2014 is £4,200 (7,200 less the annual exemption of 3,000 for 2014–15).
(5) D Arnold is paying the IHT liability, so the net gift must be grossed up. The IHT liability is therefore £28,750 (115,000 (440,000 – 325,000) x 20/80).
(6) C The due date is the later of 30 April following the end of the tax year in which the gift is made, and six months from the end of the month in which the gift is made.
(7) C When making gifts either during lifetime or on death, it can be beneficial to skip a generation so that gifts are made to grandchildren rather than children. This avoids a further charge to IHT when the children die. Gifts will then only be taxed once before being inherited by the grandchildren, rather than twice.