David HedgesParticipantSeptember 19, 2019 at 8:27 amPost count: 65
Could you clarify if the £300,000 inheritance was the gross or net amount? I know the QSR calculation but I struggle to understand whether she received £250,000 or £300,000 after the tax paid.
Thank you 🙂Tessa RobertsParticipantSeptember 19, 2019 at 8:45 amPost count: 2046
My intent when I wrote it was for you to interpret that as the net amount – am thinking if I tweak ‘inherited’ to ‘received’ that would make it clearer that the £300k is net. (i.e. the gross amount is the £300k plus the £50 tax paid).
Tutor for Expert Pensions.David HedgesParticipantSeptember 19, 2019 at 10:08 amPost count: 65
That would definitely make it clearer 🙂 thanks Tessa.Sasha WParticipantSeptember 28, 2019 at 1:37 pmPost count: 69
Question 2 – calculate Elizabeth’s IHT liability. I got one step wrong on the calc as I didnt include the £125k NRB available.
Hopefully ive answered my own question by having a read around the study notes but:
– we calculate CLT 1 and 2 against her NRB used on both due to the 14 year rule
– but when we calculate the IHT on estate, we only include the NRB utilised by any CLT 2 as its the only one within the last 7 years and that’s why there’s £125k NRB available to deducted from her estate?
Many thanks!Julie StewartParticipantSeptember 28, 2019 at 2:10 pmPost count: 155
I tripped up on that one too Sasha, came to the same conclusion as you re first CLT being outside the estate on death.Sasha WParticipantSeptember 28, 2019 at 2:13 pmPost count: 69
Thanks Julie! Least I will remember that from now on 🙂Tessa RobertsParticipantSeptember 28, 2019 at 3:04 pmPost count: 2046
Correct – CLT outside 7 years may impact on later CLTs in that they use up the NRB available to them – but they don’t use it up as far as the estate is concerned (because they’re outside 7 years).
It’s the 14 year rule 🙂
Tutor for Expert Pensions.Sasha WParticipantSeptember 28, 2019 at 4:40 pmPost count: 69
Thanks Tessa! Another quirk solved alongside cracking the new top slicing calcs today!Gary YoussefParticipantOctober 2, 2019 at 10:48 amPost count: 31
Question 1)e) ii) RENT A ROOF RELIEF
I thought was use used rent a room relief you were not able to deduct any expenses from the income, however, in your calculation you deduct £1200 against this rent a room relief method. Can you please explain why?
GTessa RobertsParticipantOctober 2, 2019 at 12:01 pmPost count: 2046
It’s not being deducted to work out the tax due (see first line).
It’s only being deducted to show how much the couple end up with once both expenses and tax have been deducted, i.e. their net income.
Tutor for Expert Pensions.Gary YoussefParticipantOctober 2, 2019 at 1:12 pmPost count: 31
RE Question 1 a)i) Income tax calc – I thought the £6000 dividend partly fell into the ART band as total gross income £150,475 therefore:
£2000 x 0% (dividend allowance)
£3525 x 32.5% (HRT band)
£475 x 38.1% (ART band)
The model answer states entire £4000 x 32.5% – why is this?
GTessa RobertsParticipantOctober 2, 2019 at 1:18 pmPost count: 2046
The personal pension contribution expands her HRT to £151,500 so she’s not quite an additional rate tax payer.
Tutor for Expert Pensions.Gary YoussefParticipantOctober 2, 2019 at 1:43 pmPost count: 31
Stupidly i didn’t think the personal pension contribution also expanded the ART band as well as HRT band. Luckily this came up in the mock exam!! Now i know 😉
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