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How to Calculate Quick Succession Relief

23 April 2019

Quick Succession Relief is something that has often come up in both the AF5 and AF1 written exams.  Brand Financial Training has put together a quick example to help those studying for any of the exams where taxation can rear its head.

This post was originally published on the Brand Financial Training Blog at https://brandft.co.uk/how-to-calculate-quick-succession-relief/ and has been reproduced here with their permission. It is relevant to examinable tax year 2018/2019. All content © Brand Financial Training. 

What is Quick Succession Relief?

Quick Succession Relief is intended to alleviate cases where the same assets would have been subject to Inheritance Tax twice within a relatively short period of time (5 years).

It allows a proportion of the tax paid on the first death to be credited against the inheritance tax paid on the second death.  If death should occur within one year, then the proportion is 100% and this reduces down to 20% if the second death occurs within 5 years of the first.

Example of How Quick Succession Relief is Applied

Let’s look at an example:

Jo dies leaving her estate of £350,000 to Gill.  Inheritance tax was paid of £10,000.  Gill dies 3.5 years later.

On Jo’s death, Gill’s estate is increased by £340,000

The amount of tax eligible for tax relief is worked out as:

The gross estate minus tax – £340,000

Divided by the gross estate of £350,000

Multiplied by the tax paid of £10,000

£340,000/£350,000 x £10,000 = £9,714

As Gill died 3.5 years after Jo, the percentage used is 40%

£9,714 x 40% = £3,885

Inheritance tax on Gill’s estate is therefore reduced by £3,885.

You should note that the relief does not apply where:

  • the earlier transfer to the deceased person was:
  • Exempt
  • chargeable but tax was not paid, because it was below the threshold
  • more than 5 years before the death

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