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

Dev died leaving a death estate of £450,000 after deducting debts and funeral costs. His wife is alive and he leaves the whole estate to her. What is the inheritance tax payable on the estate?

No inheritance tax is payable. A transfer of the whole estate to a UK-domiciled surviving spouse on death is exempt, so the nil rate band and 40% death rate do not produce any charge.

  1. A£50,000
  2. B£nilCorrect
  3. C£125,000
  4. D£22,500

Explanation

Transfers between spouses or civil partners on death are exempt without limit when the surviving spouse is UK domiciled. No tax is due, so tax of 40% on the excess over the nil rate band does not arise.

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