Inheritance Tax Calculation

[jlangrish]

Can someone please calculate the following IHT assuming death August 2009?
Total Assets �200,000
PET �150,000 October 2003
PET �750,000 July 2005
Are all the assets added together and then �325,000 deducted before tax at 40% then Taper Relief on the two PETS?
Would very much appreciate a full explanation of the calculation
Thanks, Jerry

[buildersmate]

I think it works like this:
Oct03 PET is >5 but <6 yrs ago. So tax is payable on 40% of the gift - �60k.
July05 PET is >4 but <5 yrs ago. So tax payable on 60% of the gift - �450k.
Effective gross value of estate = 200+60+450 = 710K.
Less nil rate band of �325k.
Tax is payable on 710-325 = �385k
Tax at 40% = �154k

[factor-fiction]

Worth any stars, Jerry?

[buildersmate]

Apparently not. Maybe it's wrong. Irritating not to get any feedback though.

[jlangrish]

My apologies for not responding and thanks for taking the time to post.....

Looks like a sensible solution, but have had conflicting advice on this. Another thought from an accountant is to utilise the NRB against the PETs in date order to leave a balance of 575,000 PET at 60% = 345,000. This is added to 200,000 to give a total of 545,000 which is taxable at 40% = �218,000 IHT.
Another website IHT calculator gives a totally different figure altogether.....
Confused!
Jerry.....

[factor-fiction]

With this sort of money then it's probably worth investing a few hundred pound on getting advice from a specialist accountant.

[jlangrish]

Hi Factor...

Funnily enough I've just spoken to a "Tax" friend...
For those interested, the calculation is as follows...

The NRB is actually �650,000 (�325k x 2 - since last years budget, a spouse passes his NRB to surviving spouse)
This is offset against the PETs in date order, oldest first (which is rather unfair!) to leave �250,000 betwen 4 and 5 years old - 60% taper = �150,000. This is added to the current estate value of �200,000 and the total taxed at 40%, which equals �140,000 IHT due!
Thanks for the posts
Jerry