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ACCA Applied Skills · Taxation (UK) · Payment of inheritance tax

Lena made a chargeable lifetime transfer of land to a discretionary trust and IHT is due on it. Which statement about paying this IHT by instalments is correct?

For a lifetime transfer of land, instalments over ten years are available only if the donee, here the trustees, bears the tax. If the donor pays the tax, the instalment option is not available.

  1. AInstalments over 10 years are available only if the trustees (the donee) bear the taxCorrect
  2. BInstalments over 10 years are available whoever bears the tax
  3. CInstalments are available over 5 years if Lena bears the tax
  4. DInstalments are never available on lifetime transfers

Explanation

On a lifetime transfer the instalment option is available for qualifying assets such as land only where the donee bears the tax. If the donor pays the tax, the option is not available. The 10-year period is the same as on death, so the 5-year option is wrong.

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