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4-Inheritance Tax You should assume today's date is 1 February 2022. Fensa, aged 82, has just a few months left to live due to his
4-Inheritance Tax You should assume today's date is 1" February 2022. Fensa, aged 82, has just a few months left to live due to his health. He has made the following gifts during his lifetime: 1. On 18 May 2014, Fensa made a gift to a trust with a gross chargeable transfer value of 150,000 No inheritance tax arose in respect of this gift. 2. On 20 November 2020, Fensa made a cash gift of 280,000 to his children. Fensa owns the following assets: 1. A residential property valued at 880,000. The property is an investment property that has always been rented out and never occupied by Fensa. If the property were disposed of during the tax year 2021/22 the disposal would result in a chargeable gain of 158,000. 2. A life assurance policy on his own life. The policy has an open market value of 200,000, and proceeds of 225,000 will be received following Fensa's death. None of the above valuations are expected to change in the near future. Under the terms of his will, Fensa has left his entire will to his children. The nil rate band of Fensa's wife was fully utilised when she died nine years ago. The nil rate band for the tax years 2014/15 and 2020/21 is 325,000. For the tax year 2021/22, Fensa will pay income tax at the higher rate. Required: a) Calculate the inheritance tax which would be payable if Fensa were to die on 31 March 2022. b) Advise Fensa why it would not be beneficial to make an immediate lifetime gift of the property valued at 880,000 to his children. Notes: (1) Your answer should take account of both the capital gains tax and the inheritance tax implications of making the gift. (2) For this part of the question, you should ignore the capital gains tax annual exempt amount and inheritance tax annual exemptions
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