(1).
IHT
Healey had owned the unquoted shares for more than two years. Accordingly, the shares will qualify for 100% business property relief (BPR) provided the company’s business does not consist mainly of dealing in securities or land or buildings or the making or holding of investments. In addition, where BPR is available, it will be restricted if the company owns assets that have not been used in the business in the previous two years and are not required for business purposes in the future.
Any amount that is not covered by BPR will be subject to IHT at 40% unless Healey’s chargeable transfers in the seven years prior to death are less than £325,000, such that there is some or all of the nil band available.
Accordingly, the minimum IHT liability will be nil where the whole of the value of the shares is covered by BPR and/or the nil rate band. The maximum IHT liability is £36,000 (£90,000 x 40%).
CGT
There is no CGT on death. Accordingly, the increase in value of the shares since the date of purchase will not be subject to CGT. The person who inherits the shares will have a base cost for the purposes of CGT of £90,000.
(2). Francis
| CGT | IHT | |
|---|---|---|
| Lifetime gift | Nil – Exempt as Francis' principal private residence
| No IHT unless Francis dies within seven years of the gift
|
| Gift via will | Nil – No CGT on death | The value of the house at the date of death will be included in Francis' death estate.
|