Annuity for life
Where X's legacy is in the form of an annuity for life it is necessary to ascertain the amount by which the annuity is to be reduced if it is to bear a rateable part of IHT. By Re Parker-Jervis1 it would seem that the 'slice' of capital supporting the annuity should be calculated according to the income yield of the estate; the IHT should be notionally apportioned between this 'slice' of capital and the rest of the capital; and the annuitant in reduction of the annuity should be charged with interest on the IHT attributable to that 'slice'. If the tax has been raised by mortgage the rate of interest is that actually payable; if not, the rate is that at which a mortgage could be raised.
This formula may be unfair where the estate is producing an unduly low yield or an unduly high yield. In the former case the value of
To continue reading
View the latest version of this document, as well as thousands of others like it, sign in to Tolley+™ Research or register for a free trial
Web page updated on 17 Mar 2025 15:40