Inheritance Tax: Save £100,000s with simple advanced planning Article Discussion

Mojisola wrote: »

She'd only pay the full IHT if you died very soon after giving her the money.

If you can make it past seven years, there'll be nothing to pay.

www.gov.uk/inheritance-tax/gifts

There is an alternative: I've just googled 'insurance policy to pay IHT'.

lesleymarr wrote: »

As I explained, my daughter will have to sell the house to pay IHT. If I sell up and move out, she will pay IHT on the gift I give her to buy somewhere else. As I can give her £3000 a year I will have to live for 260 more years to give her a million free of IHT. We are not that long-lived in my family.

Sorry, but unless you are going to give everything you own away and die within 7 years that is nonsense.

Spend a tiny part of your considerable wealth on some professional advice from an IFA about estate planning.

I would like to explore the forums thoughts on my inlaws situation
There are two children to benefit from the potential estate.
Currently own their own house 500k
But also own deceased mothers house having transfered ownership 20 yes ago now worth 200k. Rental income 6k
Have some savings and good pension incomes.
Late 70s but in various good health currently
What are the options to start considering shelter from iht or indeed CGT if the sell to begin gifting?
Many thanks
Martin

If their savings are below £300k then they don't really have much to worry about regards IHT as their combined nil rate band and primary residence nil rate is currently £850k rising to £1M over the next few years.

The only way to avoid CGT is to make sure you never sell or give away the rented property.

If they are close to going into IHT territory they should take advantage of their £3000 annual allowance. If they have not made such gifts in the last financial year between them they can gift £12 this year and £6k in subsequent years.

T81_madlizzy wrote: »

Keep pedalling, thank you for your reply
Just to clarify, they each have an IHT allowances to 'hand down' rather then each daughter having a limit to receive? How much is that?
Is that amount able to include the 2nd property rental/inheretance they own?
What happens to the main residence if it passed to one spouse first? They are TIC by the way
Thanks in advance
Martin

Each of them has a £325k nil rate band, and providing the estate is left to their direct descendants a £100k primary residence allowance (which will rise to £175k over the next few years)

If the first to die leaves everything to their spouse, then none of those allowances will have been used, and can be transfered to the spouse's estate on their death. If both were to die this financial year then the total that can be passed on tax free is £850k, if one died this year and the other some time after April 5th 2020 then the tax free amount will be £1M.

The rented property would be treated as just another asset, the same way as savings, shares etc. The main tax issue with that property comes if it needs to be sold for some reason where after all that time there willl very likely to be a capital gains tax issue.

This of cause assumes a future government does not change the rules in the mean time.