188体育

I(PFD)A75/S8 and 9 allow the Court to make an order that impinges on property devolving other than under the will or intestacy (IHTM35234). The value subject to any order is limited to the value net of any Inheritance Tax (IHT) borne by the recipient.

Where there is an order affecting such property and the tax borne by the original beneficiary is taken into account for the purposes of the order, the tax payable on the estate may need adjusting.聽Any consequential repayment of the tax and interest paid

• is made to the deceased鈥檚 personal representatives (IHTM05000) and not to the person who bore it, IHTA84/S146(4) and
• is treated as part of the deceased鈥檚 net estate for the purposes of the I(PFD)A 1975, IHTA84/S146(5) and (7).

Example

Eileen, the deceased鈥檚 widow, makes a claim under the I(PFD)A 1975.聽 The Court orders that, as part of her entitlement, she should receive the deceased鈥檚 half share in a freehold property.聽This interest was valued at 拢100,000 and tax of 拢18,500 was attributed to it, and was paid by the deceased鈥檚 brother, the original beneficiary.聽

Under s.8, the brother is ordered to make payment of 拢81,500 (that is 拢100,000 less 拢18,500) to the estate.聽Because the interest in the freehold property is now spouse or civil partner exempt (IHTM11031)聽the chargeable estate is reduced as is the IHT liability.聽The resulting repayment of IHT is made to the personal representatives rather than to the brother and the sum of 拢18,500 is added to the estate when recalculating the estate for the purposes for the I(PDF)A 1975.聽This sum is also added back into the deceased鈥檚 estate for IHT purposes to the extent that it is not spouse or civil partner exempt.