Gift to grandson Gift to wife Edward died on 22 July 2014. He had made only the following lifetime gifts: 3 May 2004 12 January 2006 10 May 2007 20,000 40,000 Gift to Action Aid (a national charity) 5,000 2 December 2008 Gift to son 300,000 1 July 2009 Gift to daughter 23 October 2009 300,000 50,000 Gift to granddaughter on her marriage Edward paid any IHT due on the lifetime gifts. At the date of his death Edward left an estate valued at 857,000 and under the terms of his will Edward left 300,000 to The Green Party, (a political party), with the balance of his estate equally to his two grandchildren. Edward's wife had died in December 2010 at which time 200,000 of the nil rate band was unused. Note: you should assume that the nil rate band for the year 2014/15 applies for all relevant years Required: a) Explain why it is important to differentiate between potentially exempt transfers and chargeable lifetime transfers for inheritance tax purposes. (2 marks) b) Calculate the value of the life-time transfers and the IHT payable during Edward's lifetime (if any) for each of the lifetime transfers (5 marks) c) Calculate the inheritance lax that will be payable as a result of Edward's death; showing both any additional tax payable as a result of Edward's death on the lifetime gifts as well as any tax due on the death estate. (8 marks)