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

Quinn made a chargeable lifetime transfer of £525,000 to a discretionary trust on 1 July 2018, after exemptions, having made no earlier transfers. The trust paid the lifetime tax. Quinn died on 1 September 2025, so the transfer was made more than 7 years before death. Using the Finance Act 2025 rates, what additional inheritance tax is payable on the lifetime transfer because of Quinn's death?

No additional tax is payable. The transfer occurred more than seven years before Quinn's death, so it falls outside the seven-year period and is not re-charged at the death rate.

  1. A£80,000
  2. B£40,000
  3. C£0Correct
  4. D£200,000

Explanation

The transfer was made more than seven years before death, so no additional tax arises on it. The 40% death rate and taper relief only matter for transfers within seven years before death. The lifetime tax already paid on the £200,000 excess was £40,000, and that remains unaffected.

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