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ACCA Applied Skills · Taxation (UK) · The liabilities arising on chargeable lifetime transfers and on the death of an individual

Alan made a chargeable lifetime transfer to a discretionary trust on 1 August 2025 and the transfer is within his nil rate band, so no lifetime IHT arises. He dies on 15 March 2028. Inheritance tax of £12,000 is now due on this lifetime transfer because of his death. Who is primarily liable to pay the additional tax, and by when?

The trustees, as donee of the transfer, must pay the additional inheritance tax arising on death within seven years. It is due six months after the end of the month of death, which is 30 September 2028 for a death in March 2028.

  1. AThe trustees, by 30 September 2028Correct
  2. BAlan's personal representatives, by 30 September 2028
  3. CThe trustees, by 30 April 2028
  4. DAlan's personal representatives, by 30 April 2028

Explanation

Additional tax on a lifetime transfer arising because of death within seven years is primarily the liability of the donee, here the trustees of the trust. It is due six months after the end of the month of death. Death was in March 2028, so payment is due by 30 September 2028. The personal representatives are only liable for this tax if it is not paid by the donee, so options naming them are wrong.

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