Skip to content

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

Lena died in 2026 leaving an estate of £700,000 to her son. She made no lifetime transfers. Her home is part of the estate and qualifies for the residence nil rate band of £175,000, which is available in full. Using a nil rate band of £325,000 and a death rate of 40%, what is the IHT payable on her estate?

The IHT payable is £80,000. The nil rate band of £325,000 and residence nil rate band of £175,000 total £500,000, leaving £200,000 of the £700,000 estate taxable at the 40% death rate.

  1. A£80,000Correct
  2. B£140,000
  3. C£120,000
  4. D£200,000

Explanation

Total available bands are £325,000 + £175,000 = £500,000. The excess is £700,000 - £500,000 = £200,000, taxed at 40% = £80,000. The £140,000 option ignores the residence nil rate band: (£700,000 - £325,000) x 40% would be £150,000, so it is also wrong.

Did you get it right without looking?

One question tells you little. A timed set on The liabilities arising on chargeable lifetime transfers and on the death of an individual shows your real accuracy, how long you take and where you lose marks.

Practise The liabilities arising on chargeable lifetime transfers and on the death of an individualFree diagnostic mock

More The liabilities arising on chargeable lifetime transfers and on the death of an individual questions