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

Keep_pedalling

VivienneC wrote: »

I'm executor for a friend's will and I can't find the advice I need on domicile rules to help me complete the IHT return. My friend's husband is the sole beneficiary, and according to gov.uk guidance the spouse can inherit without paying inheritance tax, providing both have been domiciled in the UK their entire lives.
My friend fulfils that criterion, but her husband does not, as he was born overseas, though he has lived in England for the last 45 years.
I've read hundreds of pages of information on inheritance tax, but nowhere can I find out what happens in the case of a spouse who is sole beneficiary but wasn't born in England.
I'd be so helpful if anyone can help.

We might be able to help better if you actually answered the questions asked on your other thread. Place of birth is unimportant it is all about where they are domiciled.

Mmaatttt

Can someone please clarify the rules on annual exemption on gifts (£3k) and carryover if unused (£3k)?
If a gift of £20k is made to a daughter is the annual exemption carryover to the next year zero?
Sorry if this has been answered. I have searched the forum and internet.
Thanks

Tom99

Mmaatttt said:

Can someone please clarify the rules on annual exemption on gifts (£3k) and carryover if unused (£3k)?
If a gift of £20k is made to a daughter is the annual exemption carryover to the next year zero?
Sorry if this has been answered. I have searched the forum and internet.
Thanks

If you make a £20k you can offset that years £3k allowance plus £3k c/f from the previous year providing you made no gifts in that previous year so £14k would be a PET subject to the 7yr rule.

Since you have used your £3k this year you have nothing to carry forward to next year so you have a max £3k next year.

If you have a spouse you could gift £10k each and use £6k allowance each so a total of £8k would be a PET.

If some of the gift could wait until 6th April you could make use of next years allowance as well so potentially only £2k out of £20k would be a PET.

Mmaatttt

Thanks Tom99, you have explained it in a way that is clearer to me than all the websites I read. One supplementary question: do we have to use accounts in separate names to ensure the £10k each is viewed individually - as opposed to using a joint account

Tom99

Mmaatttt said:

Thanks Tom99, you have explained it in a way that is clearer to me than all the websites I read. One supplementary question: do we have to use accounts in separate names to ensure the £10k each is viewed individually - as opposed to using a joint account

A joint account is fine.

2010

From what I read on here, from 6th April 2020 there is no IHT to pay on £1 million

for a married couple.

This is made up of personal allowance of £350k each and a further £150k each main residence allowance.

Our wills are mirrored so whoever dies first leaves the other everything.

Total estate to date would be approx £900k (£450k each).

So if I die first, my wife would inherit my half of the house and all my assets making £450k,

for which no IHT is paid.

What happens then, because she would have assets of £900k, leaving everything to be divided equally between our two offspring.

What IHT would be due then and how can it be avoided?

aaronj

Hi, I hope this is the right place to gain some advice. Apologies if this is elsewhere in the forum but I am not quite sure what section this related to.
Scenario
My mother has just passed away suddenly so has really got my father wanting to sort his affairs out urgently, given the suddenness my mums passing and his age of 74. My father owns our family home mortgage free now valued around £130k and he part owns 4 other properties with his brother that they rent out for a small income. An estimated value on those home could be around 350k in total. He was thinking of transferring ownership of the homes over to myself and brother but wondered what the tax implications would be due to us both working full time. He is retired so the small rental income he received he uses his tax allowance for. I intend on speaking with a solicitor on it, but any advice or guidance on routes to take would help me, as it stands I am a little unsure what I am to ask etc. In honesty he would like to give over all his assets but would he be liable to pay us rent if he signs over the family home etc? 
Any help greatly appreciated.

Keep_pedalling

Mmaatttt said:

Thanks Tom99, you have explained it in a way that is clearer to me than all the websites I read. One supplementary question: do we have to use accounts in separate names to ensure the £10k each is viewed individually - as opposed to using a joint account

If by any chance your daughter happens to be getting married soon, their is also the gift in contemplation of marriage exemption, which allows you to gift an additional £5k each.

Also as we are close to a new tax year, you can delay £6k of the £20k until April 6th which will mean £18k will be exempt rather than £12k if you give it all now. 

Keep_pedalling

2010 said:

From what I read on here, from 6th April 2020 there is no IHT to pay on £1 million

for a married couple.

This is made up of personal allowance of £350k each and a further £150k each main residence allowance.

Our wills are mirrored so whoever dies first leaves the other everything.

Total estate to date would be approx £900k (£450k each).

So if I die first, my wife would inherit my half of the house and all my assets making £450k,

for which no IHT is paid.

What happens then, because she would have assets of £900k, leaving everything to be divided equally between our two offspring.

What IHT would be due then and how can it be avoided?

It would be nil because the survivor’s estate can claim both the transferable NRB and RNRB.

Keep_pedalling

aaronj said:

Hi, I hope this is the right place to gain some advice. Apologies if this is elsewhere in the forum but I am not quite sure what section this related to.
Scenario
My mother has just passed away suddenly so has really got my father wanting to sort his affairs out urgently, given the suddenness my mums passing and his age of 74. My father owns our family home mortgage free now valued around £130k and he part owns 4 other properties with his brother that they rent out for a small income. An estimated value on those home could be around 350k in total. He was thinking of transferring ownership of the homes over to myself and brother but wondered what the tax implications would be due to us both working full time. He is retired so the small rental income he received he uses his tax allowance for. I intend on speaking with a solicitor on it, but any advice or guidance on routes to take would help me, as it stands I am a little unsure what I am to ask etc. In honesty he would like to give over all his assets but would he be liable to pay us rent if he signs over the family home etc? 
Any help greatly appreciated.

Probably not a good idea, his estate is way under the value where IHT would kick in, and he could very well face a sizeable capital gains tax liability on the transfer of the rented properties.

Transferring his home is plain madness, as he would be throwing away his security, and if any part of this idea is to avoid care costs it won’t work as it would be classed as deliberate deprivation of assets, because frankly there is no other reasonable explanation for doing such a transfer. 

What he should look at is how those rented properties are owned. If they are held as joint tenants, then on the first owners death the survivor will automatically own them outright, which means they can’t be left in a will. If he does not have an up to date will in place he needs to sort that, and put LPAs in place if not already done.