Question 1

Section A

Five years ago, Clara made a Potentially Exempt Transfer (PET) of shares in an unquoted trading company to her son, valued at £400,000. Clara died this year. At the date of her death, the shares had fallen in value to £250,000. Her son still owned the shares. Assuming no exemptions apply, what value is used for the PET in Clara's death estate calculation?

Accepted Answer

Recognize the conditions for Fall in Value Relief for IHT. If the donee still owns the asset at the donor's death and it has fallen in value, the lower value is used.

Question 2

What mistakes do candidates make on this ACCA question?

Accepted Answer

Using the original gift value, forgetting that fall in value relief is available.

How to approach this question

Full Answer

Common mistakes

Practice the full ACCA TX — Taxation Practice Exam 4

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