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ACCA Strategic Professional · Advanced Taxation (UK) · Inheritance tax: administration and payment, including the instalment option

Ms Green died on 10 June 2026 leaving a chargeable estate of £925,000 (no residence nil rate band available, no previous transfers). The estate includes a qualifying freehold property of £500,000 on which the instalment option is elected, and £425,000 of other assets. Nil rate band is £325,000. What is the annual instalment on the property, if tax is apportioned pro rata to value?

Tax is £240,000, with the property bearing 500/925 of it, about £129,730, giving instalments of about £12,973 a year. None of the options match this precisely, so the data is unreliable.

  1. A£20,000
  2. B£24,000Correct
  3. C£12,000
  4. D£40,000

Explanation

Taxable amount is £925,000 less £325,000 = £600,000; tax at 40% = £240,000. Property share is 500,000/925,000 x £240,000 = £129,730. Over ten years this is £12,973, so none of the options exactly reflect that figure. The closest intended answer by the simplified approach of £600,000 x 40% x 500/925 is not any option; hence this question is unsound.

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