ExpertACCA · Question 24 · Inheritance tax
Section B - Case 2: Bramble Farms
Arthur owns Bramble Farms, a working agricultural estate. He decides to gift the entire estate to his daughter, Beatrice, during his lifetime. The estate includes agricultural land, a farmhouse occupied by Arthur, and various farm machinery.
Instead of gifting to Beatrice directly, suppose Arthur gifted the farm machinery into a discretionary trust. The value of the transfer (after all reliefs and exemptions) exceeds his nil rate band. Who is primarily liable to pay the lifetime IHT on this Chargeable Lifetime Transfer (CLT), and at what rate, assuming Arthur pays the tax?
Section B - Case 2: Bramble Farms
Arthur owns Bramble Farms, a working agricultural estate. He decides to gift the entire estate to his daughter, Beatrice, during his lifetime. The estate includes agricultural land, a farmhouse occupied by Arthur, and various farm machinery.
Instead of gifting to Beatrice directly, suppose Arthur gifted the farm machinery into a discretionary trust. The value of the transfer (after all reliefs and exemptions) exceeds his nil rate band. Who is primarily liable to pay the lifetime IHT on this Chargeable Lifetime Transfer (CLT), and at what rate, assuming Arthur pays the tax?
Answer options:
The trustees are liable, and the rate is 20%.
Arthur is liable, and the rate is 20%.
Arthur is liable, and the rate is 20/80 (or 25%) on the excess.
The trustees are liable, and the rate is 40%.
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