A client has recently died who was in receipt of four pension annuities from various insurance companies. These annuities are guaranteed for a period of ten years and some nine years are left. The two children will receive the annuities (50 per cent each) as beneficiaries under the terms of the will.
A client has recently died who was in receipt of four pension annuities from various insurance companies. These annuities are guaranteed for a period of ten years and some nine years are left. The two children will receive the annuities (50 per cent each) as beneficiaries under the terms of the will.
We are advised by the insurance companies that the annuities payable between the date of death and the guaranteed period amount to £30,000 approximately. There is no lump sum entitlement and the sums will be paid as continuing annuities and taxed at source (basic rate).
The total estate is already over the exempt threshold and any value placed on the guaranteed annuity will be taxed at 40 per cent. What valuation is required for inheritance tax purposes and what can be the basis of discounting?
Readers' assistance would be very much appreciated.
(Query T15,815) – VSS.
