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

localhero

baxy wrote:

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

It depends ultimately what your husband intends to do with the house. If he intends to leave it to you, then the IHT effect would be neutral, as whether he leaves you a whole house or just a half share wouldn't make any difference to the IHT position.

Because, if he left his entire estate to you and you did likewise then the surviving spouse can 'uplift' their nil rate band by 100% at the prevailing rate upon second death (ie 2 x 350k if the second of you dies in tax year 2010-11)

There are pros and cons of whether he should transfer the house into both names which will depend upon your exact circumstances.

Kore_Arabin

jem16 wrote: »

There would be no tax payable by you at all.

No tax on the gift itself, certainly, but you will have to pay income tax/capital gains tax on what you have been given, going forwards.

And remember that the gift by your mother is a potentially exempt transfer (a PET) and will use up part of her IHT nil rate band should she die within seven years of making the gift.

sparks_1_1

Maybe a simple question but I am getting lots of different answers !

How much money can I give to my son and his wife without the tax man wanting a share ?

I read something a while back that you can give a one off gift (I dont know the sum) and as long as I don't pop my clogs in the next 7 years they wont get taxed on it ... (or was this a dream)

Any help would be appreciated


Any help sou

harryhound

There is no tax on gifts as such. As long as it is money you could give away millions -
the recipient would get stroppy letters from their bank accusing them of money laundering.:D

Husbands and wives and "legal registered partners" can give each other what they like.
If you give away an asset that is subject to Capital Gains Tax to someone who is not your spouse/partner then that is a disposal and CGT comes into play.
If you then die within 7 years, the gift is the first thing taken into account for your InHeritance Tax. You have a zero rate band for IHT (currently 312 K). Can uyou spot the trap? You give away your 312K second home, in the country and you and your wife bought as wreck for 80K and spent holidays and weekends turning into a palace. You get stung for CGT at 18% on the increased value. You both promptly get killed in a car crash and everything you still own (your estate) promptly pays er 40%. (There is no CGT on death).

However you can give away up to 3K a year without it getting taken into account if you subsequently die. (More if its a wedding present).
Little gifts (less than 250 GBP) can be ignored.
Regular gifts "out of income" don't count as long as they don't force you to live on your capital.

That little list is straight off the top of my head and does not include the small print such as "just suppose your wife is a foreigner" & "what about grand father's field we rent to the local farmer".

Your step one really needs to be: Read a good up to date guide to the topic such as those published by Which; they may be available in your library. Be aware that in Autumn 2007 the unused proportion of the first spouse/partner's IHT zero rate band can be carried forward to the second death. (EG husband dies leaving everything to wife. Wife dies leaving everything to the milkman. No tax is payable on the first 624K of the milkman's inheritance.)

If you post what you want to do in detail, someone, better qualified than I am, will be along to comment.

waqas

Hi guys, say you have assets worth £1m including a bently 1950 car worth £10,000 and in the will you give it free of tax to your maid and the rest of the £990k to your children.

what is the tax payable on the lot and could someone show me how its calculated.

from what i gather £312k is tax free, so their is tax on £688,000 (of the one million) at 40% = £275,200. As the will says that the car is tax free, the £275,200 IT would be payable from the £990k the kids inherit? yes or have i missed something.

What if the kids are 16? or the maid sells the car after she gets it, does CGT come into it.

Thankyou.

localhero

Answered on this thread:

http://forums.moneysavingexpert.com/showthread.html?t=1673791&highlight=

Roobarb73

localhero wrote: »

It is a gamble but it could be worthwhile doing. If he doesnt make it for seven years then effectively the value of the house including the gifted part will be taxed in the normal way. Since there's not much to lose (apart from a possible land registry fee), I personally probably would do it.

What's the value of his estate and does he have any debts (mortgage etc)?

Is there not some kind of taper relief applicable though to PETs where the person doesn't live the whole 7 years? I don't know but I thought there might be...

localhero

Roobarb73 wrote:

Is there not some kind of taper relief applicable though to PETs where the person doesn't live the whole 7 years? I don't know but I thought there might be...

Taper relief only applies where the value of the gift(s) exceed the nil rate band at the time the donor dies. Any gifts made that are less than 325k as the law currently stands would simply use up the available nil rate band and not qualify for taper relief.

Here's a link that you may find useful:

http://www.hmrc.gov.uk/CTO/customerguide/page13-1.htm

PaulAbroad

My father recently passed away and left his private pension to be split among 4 siblings, 2 living in the UK and 2 living abroad, Italy and Spain.

It has been suggested to me that the 2 siblings living abroad are not liable
to pay IHT in the UK because hey are not resident there.

Can anyone confirm this or give further advice?
Thanks

harryhound

How old was your father when he died? Presumably he was domiciled and resident in the UK?
I understand there is an avoidance of Inheritance Tax (IHT) technique for pension funds where the potential pensioner is not yet 75. It allows the fund to be left outside the deceased's estate.
I don't think the residence of the beneficiaries is relevant - you may be thinking of Capital Gains Tax (CGT)?