QUESTION 3

Lewis and Gita have three children, Peter, John and Carol. John married Joan on 20 June 2013.

The market value of Lewis and Gitas assets at 12 March 2020 are as follows:

	Lewis	Gita	Total
Main residence	550,000		550,000
Building Society accounts	145,150	215,000	360,150
Premium bonds	27,000	21,000	48,000
Equity ISAs	125,000	135,500	260,500
	847,150	371,500	1,218,650

Their history of lifetime giving is as follows:

Lewis				Gita
Date	Donee	Amount		Date	Donee	Amount
20.03.13	John	24,000		15.12.14	Carol	87,000

The gift on 20 March 2013 to John was made in consideration of his marriage to Joan.

Lewis and Gita have reciprocal wills which leave 85,000 comprising cash and ISAs to each of their children, with the residue to each other on the first death and everything to the children in equal shares on the second death.

Required:

Calculate the amount of inheritance tax payable on each death and the total inheritance tax payable assuming that Lewis dies on 12 March 2020, and Gita dies shortly after.

Show clearly any exemptions.

You should assume that the values of the estates and the tax rates and allowances in the tax year 2019/20 remain unaltered at Gitas death, and also that all lifetime gifts are made within seven years of both deaths.

The nil rate bands for earlier tax years are as follows:

2012/13 325,000 2014/15 325,000 (15 marks)

UK TAX RATES APPLY!

QUESTION 3 Lewis and Gita have three children, Peter, John and Carol. John married Joan on 20 June 2013 The market value of Lewis and Gita's assets at 12 March 2020 are as follows: Lewis Gita Total Main residence 550,000 550,000 Building Society accounts 145,150 215,000 360,150 Premium bonds 27,000 21,000 48,000 Equity ISAS 125,000 135,500 260,500 847,150 371,500 1,218,650 Their history of lifetime giving is as follows: Lewis Gita Date Donee Amount Date Donee Amount 20.03.13 John 24,000 15.12.14 Carol 87,000 The gift on 20 March 2013 to John was made in consideration of his marriage to Joan. Lewis and Gita have reciprocal wills which leave 85,000 comprising cash and ISA's to each of their children, with the residue to each other on the first death and everything to the children in equal shares on the second death. Required: Calculate the amount of inheritance tax payable on each death and the total inheritance tax payable assuming that Lewis dies on 12 March 2020, and Gita dies shortly after. Show clearly any exemptions. You should assume that the values of the estates and the tax rates and allowances in the tax year 2019/20 remain unaltered at Gita's death, and also that all lifetime gifts are made within seven years of both deaths. The nil rate bands for earlier tax years are as follows: 2012/13 325,000 2014/15 325,000 (15 marks) QUESTION 3 Lewis and Gita have three children, Peter, John and Carol. John married Joan on 20 June 2013 The market value of Lewis and Gita's assets at 12 March 2020 are as follows: Lewis Gita Total Main residence 550,000 550,000 Building Society accounts 145,150 215,000 360,150 Premium bonds 27,000 21,000 48,000 Equity ISAS 125,000 135,500 260,500 847,150 371,500 1,218,650 Their history of lifetime giving is as follows: Lewis Gita Date Donee Amount Date Donee Amount 20.03.13 John 24,000 15.12.14 Carol 87,000 The gift on 20 March 2013 to John was made in consideration of his marriage to Joan. Lewis and Gita have reciprocal wills which leave 85,000 comprising cash and ISA's to each of their children, with the residue to each other on the first death and everything to the children in equal shares on the second death. Required: Calculate the amount of inheritance tax payable on each death and the total inheritance tax payable assuming that Lewis dies on 12 March 2020, and Gita dies shortly after. Show clearly any exemptions. You should assume that the values of the estates and the tax rates and allowances in the tax year 2019/20 remain unaltered at Gita's death, and also that all lifetime gifts are made within seven years of both deaths. The nil rate bands for earlier tax years are as follows: 2012/13 325,000 2014/15 325,000 (15 marks)