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IHT help please
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waqas
Posts: 75 Forumite
in Cutting tax
Hi guys, say you have assets worth £1m including a bently 1950 car worth £10,000 and in the will you give it free of tax to your maid and the rest of the £990k to your children.
what is the tax payable on the lot and could someone show me how its calculated.
from what i gather £312k is tax free, so their is tax on £688,000 (of the one million) at 40% = £275,200. As the will says that the car is tax free, the £275,200 IT would be payable from the £990k the kids inherit? yes or have i missed something.
What if the kids are 16? or the maid sells the car after she gets it, does CGT come into it
thanks in advance
what is the tax payable on the lot and could someone show me how its calculated.
from what i gather £312k is tax free, so their is tax on £688,000 (of the one million) at 40% = £275,200. As the will says that the car is tax free, the £275,200 IT would be payable from the £990k the kids inherit? yes or have i missed something.
What if the kids are 16? or the maid sells the car after she gets it, does CGT come into it
thanks in advance
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Comments
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the IHT is as you calculated and is payable from the kids share.
cgt would be payable only if the car had increased in value from the 10,000 when sold..but bear in mind the maid will have a CGT allowance of 9,600 so unless the car is sold for more that 19,600 then no CGT would be paid.
the age of the kids isn't relevant
and the IHT limit this tax year is 325,000
and if the deceased had a spouse then they may be able to use any unused proportion of the spouse's IHT allowance.0 -
thanks, no spouse to wory about.
do you calculate iht on the total value of the estate or taking away all tax free gifts, and then work out the iht.0 -
obviously the IHT is based on the total value of the estate, otherwise IHT could be avoided by simply giving 'tax free' gifts.0
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We don't know when the death occurred, but I base the calculation on the previous tax year - otherwise the nil rate band will be 325k. In addition I assume there were no debts and that the funeral/estate administration expenses have already been deducted.
Assuming there have been no gifts aside from any within various exemptions in the 7 years prior to death, the executors will need to calculate the IHT in the following way:
Total value of estate (net) = 1m
Nil rate band = 312k
Specific gift of Bentley = 10k uses up first part of the nil rate band
990,000 estate remaining subject to IHT
Remaining nil rate band = 302 @ 0%
688,000 @ 40% = 275,200 IHT due
Estate after tax to be divided among beneficiaries = 714,800[FONT="]Public wealth warning![/FONT][FONT="] It's not compulsory for solicitors or Willwriters to pass an exam in writing Wills - probably the most important thing you’ll ever sign.[/FONT]
[FONT="]Membership of the Institute of Professional Willwriters is acquired by passing an entrance exam and complying with an OFT endorsed code of practice, and I declare myself a member.[/FONT]0 -
there is no capital gains tax on private motor vehicles
rest as local hero says0 -
Hi guys, say you have assets worth £1m including a bently 1950 car worth £10,000 and in the will you give it free of tax to your maid and the rest of the £990k to your children.
what is the tax payable on the lot and could someone show me how its calculated.
from what i gather £312k is tax free, so their is tax on £688,000 (of the one million) at 40% = £275,200. As the will says that the car is tax free, the £275,200 IT would be payable from the £990k the kids inherit? yes or have i missed something.
What if the kids are 16? or the maid sells the car after she gets it, does CGT come into it
thanks in advance
Waqas........... you say no spouse to worry about, but if you were widowed, then your executors could claim the nil rate band allowance of the spouse.......... another £312,000 last year.??
SamI'm a retired IFA who specialised for many years in Inheritance Tax, Wills and Trusts. I cannot offer advice now, but my comments here and on Legal Beagles as Sam101 are just meant to be helpful. Do ask questions from the Members who are here to help.0 -
Let us assume that "waqas" is male and father of the children?
The age of the kids is relevant ? They don't get the capital until they are 18? De facto will trust?
(They then go out and kill themselves in a life of slow horses, racy women and fast cars).
Obviously the children could be those of an unmarried person, so make an honest woman of their mother on your death bed giving her a life interest trust and save some more tax?
Joking apart, I do know of a multi generational household where the deaths were happening in the wrong order and a death bed marriage had to be arranged to keep a roof over the heads of the survivors, including the grandmother!
Ah the joys of owning a house inside the M25.0
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