S669 appears to give relief to higher rate taxpayers where accrued income is included in an estate for IHT purposes. This seems to give the following results:
Assume savings income accrued is £4,000 (net) , overall IHT rate on estate is 30% and residual beneficiary is higher rate tax payer.
Assume no additional income arises in administration apart from the £5,000 accrued
IHT paid on accrued income £4000 @ 30% 1,200
Equivalent to gross income of £5,000
Taxable on beneficiary £5,000
less S669 relief 30% of £5,000 = £1,500
Net figure taxable on beneficiary as gross income £3,500 - with a tax credit of £700
HR tax due £700
total tax paid on accrued income of £5,000 is IHT £1,200 + deducted at source £1,000 + HR liability £700 = total £2,900
Can this be right?
Christopher Adams