HMRC has updated its guidance on calculating the ‘special price’ in acceptance in lieu cases where the 36% reduced rate of inheritance tax applies. The special price (the amount of tax and interest which the property provided in lieu can satisfy) is calculated where the lower rate of IHT applies (due to gifts made to charities). Where an offer of property in lieu of tax is made under IHTA 1984 s 230, the 36% rate cannot be used in calculating the tax credit or the special price available (as a result of the application of IHTA 1984 s 33(2ZA)). Consequently, in order to ensure that the benefit of the 36% rate can extend to the offer, the amount of tax added back to arrive at the special price (the ‘douceur’) in appropriate cases is increased. The guidance also explains circumstances in which the higher douceur will not apply.
HMRC has updated its guidance on calculating the ‘special price’ in acceptance in lieu cases where the 36% reduced rate of inheritance tax applies. The special price (the amount of tax and interest which the property provided in lieu can satisfy) is calculated where the lower rate of IHT applies (due to gifts made to charities). Where an offer of property in lieu of tax is made under IHTA 1984 s 230, the 36% rate cannot be used in calculating the tax credit or the special price available (as a result of the application of IHTA 1984 s 33(2ZA)). Consequently, in order to ensure that the benefit of the 36% rate can extend to the offer, the amount of tax added back to arrive at the special price (the ‘douceur’) in appropriate cases is increased. The guidance also explains circumstances in which the higher douceur will not apply.
