'New' IHT rules is no concession.

However a widow whose husband died 25 years ago without and special arrangements will now find that she does have a 600k allowance instead of 300k.

Or have I misunderstood.

Personally I think inheritance allowance should be allocated against each heir not against the estate.

Possibly. The fine print hasn't been issued yet. So until then it is not guaranteed.

A much more sensible arrangement. It would then truly be an "inheritance" tax. That is the way it is done in some other countries.

Nil Rate Band Discretionary trusts are not that simple, given the various rules and the pitfalls of inheritance of joint and separate assets. And there seemed to be a constant threat of the Treasury making them more difficult. And many ordinary punters don't even realise they are now subject to inheritance tax, let alone know the mechanisms to avoid it. One way or another, the new allowance simply solves the problem for the vast majority of middle-income people, and certainly solves the problem for my wife and me.

Indeed, and that remains true but at least that restrict it more to life, and reduces the incidence of them taxing death. I always thought we reached the limit when insurance premiums were taxed. Trying to protect your own home and having someone else came along and demand their cut before you could do so, used to be called a protection racket and was considered unlawful.

Toom

Not always.

Say a couple have a son or daughter who is disabled ( eg autism) who is not able to find adequate employment. The parents when they die want to pass on the house to the son/daughter so tha he/she can continue to stay in the house that they grew up in and are familiar with.

With your system he/she would have to sell the house, pay off the IHT and then become a burden on the state.

What a stupid statement. Show us how the majority of people are worse off as a result of the change.

Daytona

That would be due to the level of inheritance allowance being insufficient: not because of the allowance being allocated separately against each heir.

JimBob wasn't talking about "the majority of people", but about people who "are sensible, take advice, work hard and save", which, it goes without saying, form a minority group.

:-)

Having said that, I have to say that the new IHT regime is good news for most estates, i.e. for those not in the super-rich category. A typical estate will consist of modest savings (probably no more than a couple of hundred £k) and the family home (worth no more than perhaps £400k).

Under the new system this will all be exempt. Under the old system, the first spouse to die could at best leave a sizeable chunk of the savings to the offspring, but not of the house, unless the surviving spouse paid rent to the offspring for the half of the house he/she no longer owns. Many houses are now worth so much that the surviving spouse's estate could not escape IHT, but most of those now can.

See

for the details and examples. Page 15 is where it is explained in detail. Note that deaths prior to 21st March 1972 have no entitlement to a transfer of Estate Duty, as it then was.

Well, the IHT change doesn't prove it, but the removal of CGT taper relief in the same budget may affect many people with long term investment for their retirement and it is certainly true 'that if you are sensible, take advice, work hard and save you will get robbed by Labour.'

Toom

OK. The majority of people won't benefit from this change, since the majority of estates are under 300,000, or are single people. The change will result in less money going into Gordon's coffers, therefore either taxes elsewhere will have to rise, government debt will have to rise, or public spending will have to fall, any of which are likely to affect the majority who don't benefit. Therefore the majority are worse off. :-)

"Ronald Raygun" wrote

Why would the spouse *have* to pay rent to the offspring? Do the offspring *have* to pay rent to the parent(s)?

So it seems there are situations where complicated trusts etc could still be useful, for instance re-marriages.

AIUI, if a widow, whose first husband died leaving her everything, then remarries, she now has a double IHT threshold but only half of it could be passed to her new husband if she dies before him, and also if her new husband dies before her then none of his allowance could pass to her. So in this sort of case the same sort of arrangements as couples use now to minimise IHT may be necessary.

"Andy Pandy" wrote

Is that last bit also true if her first husband only passed (say) *half* of his allowance to her -- or could her new husband also pass half of his NRB?

There's a cap of 100% increase to your threshold from late spouses. So if the first husband used up half his allowance, then she now has 1.5x the allowance. Her new husband can then pass her a maximum of 0.5 the allowance to her, and similarly she can only pass him 1x the allowance, in both cases other arrangements will need to be made for the spare 0.5 allowance otherwise it'll be lost. AIUI.

"Andy Pandy" wrote

Oh, OK. So her estate could actually benefit from her marrying a series of husbands, even if each of the husbands die leaving *all* of their possessions to children/others (with nothing to her), if each of their estates were less than 300K. Eg three husbands each leave an estate of 200K to their children, with 100K unused allowance passed to the widow. Her estate has a 600K allowance, even though none of her estate comes from from her husband's estates ... ?!

AIUI, if the house (or part thereof) is not to be considered part of the surviving spouse's estate, it must have been fully given away, giving him/her no automatic right to live in it. Paying an economic rent for it (or a portion of it) demonstrates to the taxman that it really does belong to someone else.

spouses.

Yup - I think so.

I can see tax dodges relating to marrying terminally ill people with no assets...

This might be true for people with investments held for a very long term. Mine only go back to 1994 and the reduction in CGT rate more than offsets my loss of indexation relief and taper relief based on future projections to when I might actually want to start realizing gains.

But anybody for whom this is going to be an issue have the choice of realizing at least some of their gains this year and using up their 9k exempt amount. Then in future years they can crystallize more of their gains and use up more allowances. (Married couples can trivially use

18k to soak up investments that have a lot of indexation relief)

Obviously anybody who has already used up their CGT allowance this year is a bit stuck with the indexation relief and people who were expecting to pay 12% (basic rate with 60% taper relief) and were expecting to realize large gains in one year that they can't do this year might be a bit annoyed. But I'm inclined to think that the majority of people who have planned for future CGT will see little or no difference and the rest who've done no planning, or BTL investors where it can be hard to realize just part of your gain each year, will probably find that paying 18% rather than 40% will leave them much better off.

I know that some investments attract 75% taper relief after two? years but how many of those are going to be people with long term investments for their pension?

Tim.