Value of a FRB for IHT purposes

[stewamax]

If someone dies before their one-year annual-interest fixed-rate bond matures, does its value for IHT at the date of death include interest that has been accrued but is not payable until maturity?

[Dod101]

If someone dies before their one-year annual-interest fixed-rate bond matures, does its value for IHT at the date of death include interest that has been accrued but is not payable until maturity?

I do not know the rules but I would have thought that the accrued interest would be paid and treated as income.Not that it would normally make a lot of difference to to IHT payable.

Dod

[scrumpyjack]

If someone dies before their one-year annual-interest fixed-rate bond matures, does its value for IHT at the date of death include interest that has been accrued but is not payable until maturity?

I do not know the rules but I would have thought that the accrued interest would be paid and treated as income.Not that it would normally make a lot of difference to to IHT payable.

Dod

The accrued interest would be included in the probate valuation and so 40% potentially charged in inheritance tax on it. The full interest would then be subject to income tax (with no deduction for the IHT charged) payable by the estate, unless the FRB had been distributed to the beneficiary before the interest payment. One could argue that this amounts to double taxation, though the residual beneficiary might be able to claim the income tax back eventually, based on the R185 issued by the executor, if he/she had enough personal allowance to cover it.