IHT

[Headinthesand27]

I just received my offer to settle, and was shocked to see that the IHT is about half of my tax owed. I knew that IHT was due when the loans are written off, but did not expect such a big amount!
My question, does anybody know how HMRC calculate IHT?? Does the nil rate band (gbp 325k) apply to the individual or the trust as a whole (even if multiple contractors were part of the trust?)

[webberg]

It's been discussed and explained a lot on these forums.

I think a couple of hours research and search string iterations would reward you.

[Superfly]

I just received my offer to settle, and was shocked to see that the IHT is about half of my tax owed. I knew that IHT was due when the loans are written off, but did not expect such a big amount!
My question, does anybody know how HMRC calculate IHT?? Does the nil rate band (gbp 325k) apply to the individual or the trust as a whole (even if multiple contractors were part of the trust?)

It may be worth you having a chat with EtcTax. In one of his correspondences, Andy at EtcTax mentioned that the IHT element could be challenged. Depending on how much you owe, it may be worth challenging.

[Headinthesand27]

It may be worth you having a chat with EtcTax. In one of his correspondences, Andy at EtcTax mentioned that the IHT element could be challenged. Depending on how much you owe, it may be worth challenging.

Thanks will do.

In the meantime, does anybody know how the anniversary charge/tax is calculated?

[Superfly]

Thanks will do.

In the meantime, does anybody know how the anniversary charge/tax is calculated?

Does this help? (doesn't explain how it is calculated I'm afraid)

If the debt remains due to the trust at the 10 year anniversary date then the value of that debt will be charged as part of the 10 year anniversary charge.

The 10 year anniversary charge will apply to the value of the debts that you owe the trust. If the total value of the debts is less than the IHT nil-rate band (currently £325,000), it is unlikely that there will be any IHT to pay at the 10 year charge. An exit charge will only arise when money is paid out or the trustees take an action which reduces the value of the trust fund, for example writing off the debts they are owed. Again, if the total value of the trust fund is less than £325,000, it is unlikely that there will be any IHT to pay.

Source: [Withdrawn] Tax on contractor loans: extended time limit and more information - GOV.UK