My client's father passed away in 2014 (2014/15) and as per his will, 50% of his share in family home (50% held by mother) was transferred to 5 donees. 1/5th to deceased's wife and 4/5th to his 4 children.
I was reviewing IHT calculations done by the previous accountant in 2014/15 and he has calculated £675,000 (£1,350,000 was the valuation on death) as the transfer value on which IHT was paid.
Shouldn't the transfer value be £540,000 (£675,000/5 x 4) as 1/5th transferred to the wife wouldn't be subjected to IHT? Or am I missing something?
I understand how releif and allowances work for IHT but I can't believe that the previous accountant would have made such a mistake so wanted to confirm before getting back to the client.