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

Romablade

Hi all, slightly different question. My father recently died and my mother (his wife) inherited his estate, not a huge amount, around £100k (no property). My mother now wants to gift some of this to us, her children. My question is, as a higher rate tax payer, would I have to pay any tax on the gift from my mother? If so would this be Capital Gains or Income Tax?
Thanks

jem16

lottiespoon wrote: »

a bit confused now with so much information. Can someone tell me does it matter if all the assets are in the husbands name?

It would mean the assets are all in the husband's allowance

Would it be better to change all the assets that are worth approximately £550K into both husbands and wifes names before one or the other dies?

Doesn't really matter much now. All assets left to a spouse are free of IHT. After the first death the 2nd person can use the unused part of the first person.

jem16

Romablade wrote: »

Hi all, slightly different question. My father recently died and my mother (his wife) inherited his estate, not a huge amount, around £100k (no property). My mother now wants to gift some of this to us, her children. My question is, as a higher rate tax payer, would I have to pay any tax on the gift from my mother? If so would this be Capital Gains or Income Tax?
Thanks

There would be no tax payable by you at all.

dorsetmatt

Hello,

I would really appreciate any advice people can give on my situation.

My mother and father, who are both in their early 60s, would like to give me a gift as a early 'inheritance'. I do not know the exact sums involved, but I believe it is fair to say that their combined assets would not come anywhere near the inheritance threshold.

My question is would there be any tax liability on this gift from my mother and father to me? My father is planning to write me a cheque which I would pay into my current account. Would this be deemed as 'income' as therefore taxable either now or at any later stage?

Any help anyone could provide would be much appreciated.

Thank you

sloughflint

dorsetmatt wrote: »

I believe it is fair to say that their combined assets would not come anywhere near the inheritance threshold.

No tax implications at all for any of you.

dorsetmatt

Thanks. Just so I am entirely clear, both myself and my mother and father wouldn't have anything to worry about as far as both IHT and CGT is concerned?

harryhound

Is there not a theoretical possibility of a liability to CGT for the parents if shares and corporate bonds are transferred to the younger generation? That would generate a "disposal" for CGT purposes?
Given the current bombed out state of the markets, there won't be much of a capital gain on most securities transferred, but filling in the calculations on a tax return is a pain in the neck? Keep below the radar if possible!

Lucky_dipp

localhero wrote: »

Hi Misstique,

Since single people have only 1 tax threshold available, currently £300,000, this makes inheritance tax planning a little more difficult.

That said, it is not impossible. There are some generous allowances and reliefs available. These are chiefly:

1) Business Property Relief - certain types of business asset owned for 2 years at death can be left completely free of inheritance tax. As can -
2) Agricultural land
3) Gifts to charity
4) Gifts during your lifetime if you survive 7 years - all exempt, subject to certain conditions.

There are other allowances available, but these are the main ones.

Hi LocalHero,
I was looking through the forum and found your very interesting comment about Business property Relief. I own my own home, but I also own several other properties that I rent out. As my only occupation is as a landlord, could it be argued that owning and letting properties is my business and the houses are business property and therefore would not incur IHT?
If not any ideas what I can do to minimise my IHT on these properties?
Many Thanks

Lucky_dipp

baxy

Have recently realised that our house is just in my husbands name even though we have been in it for 27years. What will be the inheritance tax implications of this. Should we get it put into both our names? Would it be better to get it into ours and our 1 daughters name? What would be the likely cost of any changes to the title? Any advice would be appreciated.
Ta Baxy

localhero

Lucky_dipp wrote:

Hi LocalHero,
I was looking through the forum and found your very interesting comment about Business property Relief. I own my own home, but I also own several other properties that I rent out. As my only occupation is as a landlord, could it be argued that owning and letting properties is my business and the houses are business property and therefore would not incur IHT?
If not any ideas what I can do to minimise my IHT on these properties?
Many Thanks

Lucky_dipp

Hi Lucky_dipp,

I'm afraid the properties - whether commercial or residential - wouldn't qualify within the rules for BPR as a trading business.

There is a limited exception, that is 50% BPR where a building of yours is used as part of a trading business (ie a warehouse that is used to contain stock for example).

Here's a link you may find useful: http://www.hmrc.gov.uk/cto/customerguide/page16.htm