Inheritance Tax Planning

kaznei

BTW: the threshold is at present £275,000, rising to £300,000 next year.

RogerM_2

kaznei wrote:

BTW: the threshold is at present £275,000, rising to £300,000 next year.

Nil Rate Band this year is £275,000, next year 2006/07 it will be £285,000 and rising to £300,000 for 2007/2008.

I like your explanation of Discretionary Will trusts - very succinct.

Straykitten

Tell me this - why do we have inheritance tax? It may seem like a very simplistic question but I want to know why. We pay taxes out whole life - on our salaries, our purchases, our homes, our savings - so why do we have to pay even more tax again, on all the things we've already paid tax on, when we die???

I think it stinks to high heaven that we have to pay it at all. I think it's disgusting that we have to jump through all these hoops to stop the taxman/government stealing even more of what we've earned the right to pass on to our loved ones.

And correct me if I@m wrong, but didn't the government exempt the Queen Mother's estate from inheritance tax? Tax the poor to pay for the rich - I thought Labour stood up for the working class. Haaa!

Am I alone here?

Andy_L

gailcarty wrote:

Tell me this - why do we have inheritance tax? It may seem like a very simplistic question but I want to know why. We pay taxes out whole life - on our salaries, our purchases, our homes, our savings - so why do we have to pay even more tax again, on all the things we've already paid tax on, when we die???

Because if we didn't have inheritence tax another tax would increase to compensate. Whether you'd rather have no IHT and, say, higher income tax or vice versa depends on your own personal financial situation

Andy

[Deleted User]

I just had a wakeup moment. IHT taxed at 40% on money that has already been taxed at maybe 40%. ie 80% to the taxman

No wonder more older people are thinking of spending as much as they can

Patr100

gailcarty wrote:

Tell me this - why do we have inheritance tax? It may seem like a very simplistic question but I want to know why. We pay taxes out whole life - on our salaries, our purchases, our homes, our savings - so why do we have to pay even more tax again, on all the things we've already paid tax on, when we die???

We've had Inheritance tax since 1986 - before that, something called Capital Transfer Tax applied although i don't know the details of that. The main issue is that now , specially in the South East, house prices have risen so much it's so much easier to move over the threshold.

If it were abolished they would make up the loss some other way.

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ducky2004

lululu wrote:

What are the tax implications for my husband and me as his uncle has given us £50,000 over the past year as a gift?

Sorry for the very late respond - just found this thread. I will reply anyway in case it will be of use to anyone.

The 50k would be a potentially exempted transfer. If he has not given anything else to anyone (not at market value) and has total asset > £285k, then there is no implication.

If he has given lots of money to someone else, like charity as well during the last 7 years, and do not live for at least 3 years, you could face a 40% tax on the 50k received - even if you have spent them all. This is reduced gradually to zero if he survive between 3 - 7 years.

ducky2004

Not necessarily that it has to be made up. Brown can learn a little bit about cutting cost from this forum. There are always ways to spend more than the income (or revenue) and it takes dicipline and wisedom to spend within your means.

The problem is also this is a tax that most ordinary folks don't really understand how it works (oh...democracy), extremely complicated, and can make middle class family who have just suffered a lost suffer a lot more headache.

ducky2004

of course if no one knows then there is no issue. If you are the executor then you must now and you would sign on the probate form...

The reduction of the 10k begins at year 3, so at year 6, only 2k worth of the 10k is taken into account.

ducky2004

That is on top of the risk of the house (main asset) being seized by council to fund the care home, in which case, it can be 100% tax.

40% tax on the remaining of 40% tax gives 0.6 x 0.6 = 0.36 or 74% tax.

Also the main problem about 'claw back' on potentially exempt transfer when people might have spent all the money given already.

Recently, there is a case where a 83 year old won lottery and give lots of cash to his relative. Let's hope that he live long and prosper.. and hope that the relatives have made adequate provision for IHT...