Subpart

Peter died on the 2nd of May of 2020, leaving to his only heir and son, Andrew, estate

of total value of 650,000.

Tasks:

Calculate the Inheritance Tax (IHT) in each one of the following

circumstances:

i) If the total of the gifts made by Peter to Andrew during the last seven years of

his life was nil.

ii) If the total of the gifts made by Peter to Andrew during the last seven years of

his life was 150,000.

iii) If the total of the gifts made by Peter to Andrew during the last seven years of

his life was 380,000.

iv) If the total of gifts made by Peter to Andrew during the last seven years of his

life was 50,000 and if Peter had already inherited all of his estate from his wife who

passed away in 2017.

Subpart B

Jason has made some investments in the past, by buying some paintings of young

artists. Their total value these purchases was 150,000. After holding on to them for

some years, their value has increased significantly, and Jason decided to sell them.

Thus, he has managed to sell them in September 2020 at a total sale price of

330,000. During tax year 2020, Jason did not have any income, except an amount

of 10,000 from interest generated from some deposits he had at a Bank.

Task:

i) Calculate the capital gains tax and the income tax that Jason will have to pay

for tax year 2020.

ii) If Jason decided in 2017 (before he bought the paintings) to start a new

business activity as an art dealer, what is the capital gains tax and income tax that

he would pay for tax year 2020?

TAX RATES AND ALLOWANCES The following tax rates and allowances are to be used in answering the questions. INCOME TAX RATES TAX YEAR 2020 Tax Rates Tax Rates Non-Savings Savings Dividends for Dividends 0% X (N/A) 1-5,000 E X (N/A) N/A 20% 1-37,500 E 5,001-37,500 E 1-37,500 E 7,5% 40% 37,501-150,000 E 32,5% 45% 150,001 E +and over 38,1% Personal allowance for persons until 65 years old: 12,500 E Income limit for personal allowance: 100,000 E Personal Savings Allowance: up to 1,000 E Dividend allowance: 2,000 f CAPITAL GAINS TAX RATES TAX YEAR 2020 Lower tax rate 10% or 18% Higher tax rate 20% or 28% Annual Exempt Amount 12,000 E INHERITANCE TAX RATES TAX YEAR 2020: 1-325,000 E Nil Excess - Tax rate in case of death 40% Excess - Tax rate in case of lifetime transfer 20%