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

65Spin_ster

I wish Martin Lewis would stop saying stuff like  “so few people will have to pay inheritance tax”. He could make reference to “saddo” folk like me- single, never married, no children . Modest estate of £600k but I am going to be heavily penalised by IHT unless I gift money now . At age 66 I have no idea how much rainy day money I need to keep to cover my life expenses. No children to look after me in my old age! Any ideas how I can offset IHT ?  I am in the camp that believes I’ve already paid tax on income and thought I was saving wisely and modestly .grrrrr! 

[Deleted User]

PegasusPJ said:

the article says the unused % of the IHT nil band passes to the spouse.. but what if the 1st deceased spouse had no assets to pass on to the 2nd in the first place? (none passed to anyone)

The he/she has used 0% of his/her IHT Nil rate band. 

Keep_pedalling

65Spin_ster said:

I wish Martin Lewis would stop saying stuff like  “so few people will have to pay inheritance tax”. He could make reference to “saddo” folk like me- single, never married, no children . Modest estate of £600k but I am going to be heavily penalised by IHT unless I gift money now . At age 66 I have no idea how much rainy day money I need to keep to cover my life expenses. No children to look after me in my old age! Any ideas how I can offset IHT ?  I am in the camp that believes I’ve already paid tax on income and thought I was saving wisely and modestly .grrrrr! 

Most people’s estates fall into IH territory because they have inherited themselves and / or house price inflation, so basically unearned income which you have paid no tax on. That is certainly the case with us.

You are not being punished (dead people never are) and you have options to avoid / reduce the amount of tax your estate might pay, the primary one being to enjoy your hard earned by spending some of it on having a good time.

Doc_N

Keep_pedalling said:

65Spin_ster said:

I wish Martin Lewis would stop saying stuff like  “so few people will have to pay inheritance tax”. He could make reference to “saddo” folk like me- single, never married, no children . Modest estate of £600k but I am going to be heavily penalised by IHT unless I gift money now . At age 66 I have no idea how much rainy day money I need to keep to cover my life expenses. No children to look after me in my old age! Any ideas how I can offset IHT ?  I am in the camp that believes I’ve already paid tax on income and thought I was saving wisely and modestly .grrrrr! 

Most people’s estates fall into IH territory because they have inherited themselves and / or house price inflation, so basically unearned income which you have paid no tax on. That is certainly the case with us.

You are not being punished (dead people never are) and you have options to avoid / reduce the amount of tax your estate might pay, the primary one being to enjoy your hard earned by spending some of it on having a good time.

Very true. And a possible alternative might be a wealth tax, which could be even more unpopular, depending on the threshold. Public services such as health, education and welfare have to be paid from somewhere.

RSD7a

From a joint account my wife and I gift our two children £20k each. If one of us dies (say 4 years later) and the other survives for 7 years + what's the IHT tapering situation going to be? 

Bookworm105

RSD7a said:

From a joint account my wife and I gift our two children £20k each. If one of us dies (say 4 years later) and the other survives for 7 years + what's the IHT tapering situation going to be? 

joint accounts are treated as 50/50 unless there is documentation in place saying otherwise
TSEM9812 - Property held jointly by married couples or civil partners: Overview: two main rules - HMRC internal manual - GOV.UK

TSEM9810 - Property held jointly by married couples or civil partners: Overview: explanation of terms - HMRC internal manual - GOV.UK

the payment from the deceased therefore falls under the 7 year rule

RSD7a

Bookworm105 said:

RSD7a said:

From a joint account my wife and I gift our two children £20k each. If one of us dies (say 4 years later) and the other survives for 7 years + what's the IHT tapering situation going to be? 

joint accounts are treated as 50/50 unless there is documentation in place saying otherwise
TSEM9812 - Property held jointly by married couples or civil partners: Overview: two main rules - HMRC internal manual - GOV.UK

TSEM9810 - Property held jointly by married couples or civil partners: Overview: explanation of terms - HMRC internal manual - GOV.UK

the payment from the deceased therefore falls under the 7 year rule

The links you have kindly provided seem to be about jointly owned property and income arising. On the face of it, that doesn't seem to relate.to my question about gifts from cash in the bank. 

Sarahspangles

RSD7a said:

Bookworm105 said:

RSD7a said:

From a joint account my wife and I gift our two children £20k each. If one of us dies (say 4 years later) and the other survives for 7 years + what's the IHT tapering situation going to be? 

joint accounts are treated as 50/50 unless there is documentation in place saying otherwise
TSEM9812 - Property held jointly by married couples or civil partners: Overview: two main rules - HMRC internal manual - GOV.UK

TSEM9810 - Property held jointly by married couples or civil partners: Overview: explanation of terms - HMRC internal manual - GOV.UK

the payment from the deceased therefore falls under the 7 year rule

The links you have kindly provided seem to be about jointly owned property and income arising. On the face of it, that doesn't seem to relate.to my question about gifts from cash in the bank. 

Are you aware of the HMRC definition of Property?

‘Property’ includes land and buildings, savings accounts, shares (but see exclusion in TSEM9822) and intellectual property.
For further detail, see TSEM6005-6016 for the legal background to types of property, ‘real’ and ‘personal’.

Or is the query about whether this is a gift from income?

RSD7a

Are you aware of the HMRC definition of Property?

No I wasn't aware. Thanks for the clarification.