»Ê¹ÚÌåÓýapp

Example

»Ê¹ÚÌåÓýapp total legitim (IHTM12221) fund is £80,000.  »Ê¹ÚÌåÓýappre are 4 children, 1 over 18 and 3 under 18 at the testator’s death.  An election is made for the application of IHTA84/S147 (4).  For inheritance tax purposes, the legitim fund is calculated in the normal way, (IHTM12225) but without deducting the inheritance tax due on the fund itself.

Situation 1

If the child over 18 renounced their legitim share at the outset, the legitim fund must be restricted to £60,000 for the purposes of any later tax charge.  You should charge tax on £60,000 as the top-slice of the testator’s estate.  If only 2 of the younger children eventually claim their shares of legitim and the third renounces, the 2 will each pay one-third of the tax on the £60,000.  »Ê¹ÚÌåÓýapp one-third of the tax attributable to the share of the remaining child who has renounced legitim will not be payable.

Situation 2

If the child over 18 claimed their share of legitim, the legitim fund would be £80,000 but tax would have been paid at the testator’s death on £20,000 of that fund.  When the 2 younger children claim their shares you should charge tax on £60,000 as the top-slice and each will pay one-third of that tax.  As before, the one-third share of the tax attributable to the share of the child who renounces legitim will not be payable.  »Ê¹ÚÌåÓýappre will be no adjustment of the tax liability of the older child.