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IHT treatment of instalment payments

IHT treatment of instalment payments

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An individual was entitled to £60,000 payable in 6 annual instalments of £10,000 each. The £60,000 was payable by a property developer  in return for an option to buy a piece of land for say £600,000. The option has not been exercised. The individual died after 4 instalments had been received and the CGT paid in full. I assume the remaining £20,000 is included in the estate of the deceased with no discount?

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By Tax Dragon
13th May 2020 18:19

Why would that be?

Unless something says otherwise, I'd include the asset that was held (the chose in action), not the one that wasn't (the cash) - and apply the IHT valuation rules. Does something say otherwise?

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By nick farrow
14th May 2020 12:59

thanks Dragon

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By Tax Dragon
14th May 2020 13:14

No worries Nick.

I'm looking forward to your supplementary questions about CGT on receipt of the £20k/£600k (if the option does get to be exercised).

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By nick farrow
14th May 2020 16:46

thanks Dragon - that would be an interesting question indeed and ok I admit it this for once is personal in that it's my mother estate although the numbers are different

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By Tax Dragon
14th May 2020 17:04

I'm sorry to hear that.

I hope it was before the restrictions came in and you were able to give her a proper send-off. (It's horrible now. Some of what is happening - for entirely understandable reasons - is heartbreaking.)

But in that case - I do look forward to the CGT question, as that sounds like it will be good news.

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By nick farrow
14th May 2020 17:18

many thanks for your condolences - my mother died at home v luckily just before the lock down etc. but we will have a memorial event for her instead of funeral.

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