On 23 August 2015, Peter made a gift of a house valued at £420,000 to his son, John. This was a wedding gift when John got married. The nil rate band for the tax year 2015/16 is £325,000.
On 23 August 2015, Peter made a gift of a house valued at £420,000 to his son, John. This was a wedding gift when John got married. The nil rate band for the tax year 2015/16 is £325,000.
Peter
Peter died on 20 March 2021 at which time his estate was valued at £880,000. Under the
terms of his will, Peter divided his estate equally, before inheritance tax, between his wife and his son, John. Peter had not made any gifts during his lifetime except for the gift of the house to John. Peter did not own a main residence.
John
John sold the house which he received as a wedding gift from Peter, his father, on 5April 2021. The following information relates to the property:
Net sale proceeds after costs of disposal £496,400
Cost of new boundary wall around the property (there was previously no boundary wall) £(5,200)
Cost of replacing the property’s chimney £ (2,800)
John has taxable income (after deduction of the personal allowance) of £13,950 in 2020/21. The house was never occupied by John.
Required:
a) Calculate the inheritance tax that will be payable as a result of Peter’s death.
b) Calculate John’s
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