Inheritance Tax

Robert

I see your point. But at, least the deceased should have been keeping records of things that would attract CGT. People often do not keep a record of their gifts - and we are talking here of gifts above £250. It surprises me that you think that most estates don't include such gifts.

Sorry, I don't know what they are. I didn't meet them when I was an executor.

Robert

In message , Mark writes

No, not at all, in fact he has raised their profile. There are still loads of tricks.

In message , Robert writes

My intention, as I wrote further down that post, was 'material' gifts. This gifts over and above the allowances, i.e. the 3k and 250 etc., are, in my experience, relatively rare.

OK, thats fair enough, I was merely pointing out that IHT is not charged solely @ 40% but ALSO at 20% and up to 6% in certain circumstances. It is highly unlikely that you would come across these as an executor unless the will created a Discretionary Trust with a value in excess of the Threshold for IHT and you were also a trustee of that trust. You would then be very interested in the exit and periodic charges.

The charge at the lifetime rate for Chargeable Lifetime Transfers would only be incurred if a qualifying trust (some trust types escape) was created in the donors lifetime which (together with the total of PETs & CLTs in the last seven years) exceeded the threshold. IHT would be due on the surplus immediately the gift was made at 20%. An executor would only be interested in these if death occurred with seven years of the last gift.

I love it when you talk dirty....

The usual reason stated by those that think IHT should be abolished is that it is unfair to tax again money that was already been taxed before it was received by the (now) deceased person.

This, of course, ignores the cases where it hasn't been and ISTM that IHT which tries to discriminate would be very difficult to enforce.

tim

That's easy to fix - just apply the tax to the beneficiary rather than the estate. Then you have complete parity with earned money; which of course has generally already been taxed before being paid to the grafter.

Jeff

In message , Miss L. Toe writes

Say Babe, you wanna see my etchings...?

I don't wanna see the boyle.

The circumstance I was referring to was a particular one where a parent has remarried. Both parties in the marriage have clearly defined assets. However when they die both parties' assets will be lumped together before applying the Tax free part of IHT, thereby halfing the effective Tax free portion.

Mark.

Please share this information. My parent is struggling to know what to do now.

Mark

I don't see how this 'fixes' the problem.

Are you saying that we treat the money as an Income Taxable payment in the hands of the receiver.

This would be worse for most estates as you would lose the 300K (almost) tax free amount and gain what? 20K (times number of beneficiaries) taxed at 20%.

tim

Only if *they* *choose* to gift betwen spouses.

tim

Sort of - since it does represent an income

Well, since it's a one-off rather than an ongoing income it doesn't make sense to apply an annual allowance. I'd suggest the equivalent of maybe 10 years' allowance. I think this was the sort of reasoning behind the current IHT allowance. I just don't get why it's applied to the estate rather than the recipient.

Jeff

In message , Jeff writes

The effect is that it is taxed on the recipient, it is just taxed 'at source, which is far easier to collect.

In message , Mark writes

This can be easily fixed by writing wills.

In message , Mark writes

They can largely do what was available before. Have they written wills using a Nil Rate Band IOU Discretionary Trust? Depending on the value of their assets the tenancy of the domestic house may need to be severed.

If there are investments then Discounted Gift Trusts will get dosh out of their estate and provide them with a lifetime income, but this would be a PET and the seven year rule applies but if death occurred within seven years then the discounted value of the reversionary element would be deducted from the gift value before being be added back into the estate. Depending on their age and state of health substantial amounts can be used here without triggering Gordon's new tax regime on such trusts because it is the discounted value, not the actual value) which is used as a trigger for LIfetime IHT.

Back to back annuity/LIfe policy in trust will get a large amount of dosh out of the estate instantly but the beneficiaries wont get it until the second life dies.

Second death whole of life plans, either single or regular premium, can be used to pay the IHT if there are large tangible assets in the assets.

These are just some initial ideas, hope this helps.

Because you pay IHT instead, and that is generally higher

They get business or agricultural property relief, so they don't pay IHT on that.

Thanks for the detailed reply :-) I don't know the full detail at present. I will ask when I next see them. They want to ensure that the surviving partner can stay in the house (main asset) if one partner dies first.

Mark

What's the alternative, when most of the estate is tied up in their main residence?

Mark