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

John_Pierpoint

The various taxes, Income tax - IHT - CGT don't mesh together logically (IMHO). The tax system is just a mess of short term arbitarty rule making; there is no clear logic (this is just incompetence if you believe in the c0ck up explanation) or because it is better for both game keeper and professional poacher (if conspiracy is your explanation) for the ordinary peasants to be confused.
I have some practical experience of owning two properties at the same time and so having to know the rules to minimise my tax liabilities but I don't claim to know all the wrinkles. Needless to say where three sets of rules come up against each other (perhaps you could rent out your existing home in the "hope" that hyper inflation could show you a big "profit" in fiscal terms) There are more arbitrary rules at the interfaces..

There are many many threads on this part of the forum, that you could find by searching.
Here are a couple of starting points:
https://forums.moneysavingexpert.com/discussion/3585829
https://forums.moneysavingexpert.com/discussion/3632113

getmore4less

The various taxes, Income tax - IHT - CGT don't mesh together logically (IMHO).

IHT and CGT are mutualy exclusive.

On death all potential previous CGT issues disapear and there is a IHT assesment on estate value at date of death(which can be changed later under certain circumstances).


A IHT205 form will need to be done to go with the PA1 probate form.

what you need to do is get a probate value forthe house as large as possible(keeping the total estate under any nill rate band) wihout drawing the attention of the district valuer(or whatever they are calld these days)

This will be the value going forward for any CGT assesment by the estate or benifitiaries.

All property needs to go throuh a CGT assesment on disposal, there are a number of allowances and exceptions that in many cases reduces any tax due to Zero.

If the estate on DOD is around £290k and unlikly to be over £325k then you can forget any IHT liabilities and just focus on the income tax and CGT liabilities looking forward.

Babsk

Hi John_Pierpoint
Just to update you on this topic re accounts of convenience. We sought advice from a solicitor and though the accounts are now in husbands name, he is classed as a trustee of the said monies. As long as they are declared in the IHT form as 100% funded by deceased and that can be proved through bank transactions then the money that needs to be transferred to his brother as the other beneficiary is not counted as a gift for our inheritance tax liability. He can also change the will through a Deed of Variation so that the grandchildren have a lump sum rather than ourselves therefore reducing the liability further.

laneybel2002

Re Inheritance Tax, my mother in law live in a Alms House so does not own any propery. She has her own furniture and apart from that a little money in the bank. Her husband recently died and had a Bond worth £50K. I think the total was about £53, 000.00 ish She is being told she should pay 40% Inheritance Tax on this. But reading forums and advise I see you only pay Inheritance Tax on Estates worth over £325,000. Is this right, can someone advise me on this. She is very worried about this now. His total estate would not have been that amount.
Thanks

Mojisola

She shouldn't pay any IHT on anything her husband has left her.

Still_Cruising

I recently inherited a house from my Godfather.
Probate has been granted. The house was valued at £500k on date of death July 2011.
I have done the house up and now have had an estate agent valuation of £650k.
My plan is to nominate this inherited house as my PPR (main home) and sell it after July 2012. I would then nominate my old house as PPR.
Am I correct in thinking that I will not have to pay CGT on the uplift in value or IHT as the house would be sold more than one year after the date of death. I would actually live in the inherited house but not 7 days a week.

Tressilliana

Hi all

Can anyone advise. I've seen a similar thread from Angelica, a couple of years back, but couldn't find the answer.

My parents live permanently in Austria (Dad is British citizen and Mum is an Austrian citizen), and they own a house in both Austria (value c.£500k) and UK (value c.£350k), and their savings are in UK banks (approx. £50k).

As they live in Austria, things are slightly different and I don't understand about double taxation rules etc......When one of them dies, will the other have to pay any inheritance tax, and when both die, will my brother and I have to pay inheritance tax in both UK and Austria. Is there anyway of getting around it? They have mentioned that they want to leave the houses, especially the one in Austria, to my brother and I.

Any advise would be greatly appreciated.

Thanks
:beer:

getmore4less

Unlikely anyone here knows the taxation rules of Austria so would have to look them up.

In the UK benifitiaries don't pay inheritance tax, the estate does before you inherit.

They will likely need specialist advice and possibly multiple wills.

cat_owner

Hi. can any one tell me about i.h.t as i am divorced.and about to make a will, I would like to leave my house to my daughter, house about 350k she lives with me now. will she have to pay I.H.T. as she has no money of her own?

getmore4less

cat_owner wrote: »

Hi. can any one tell me about i.h.t as i am divorced.and about to make a will, I would like to leave my house to my daughter, house about 350k she lives with me now. will she have to pay I.H.T. as she has no money of her own?

If the estate is over £325k then there will most likely be IHT to pay from the estate before anyone can inherit anything.

Is there a mortgage? other assets? other debts?

Any death benifits from emplyment, pensions, or insurance