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

claire21

Check out what you can do in 2 years rather than 7 years.

It's along the lines of the AIM market and business property relief

It's been well worth it from my point of view.

antrobus

kuepper wrote: »

Re the 7 year rule, how would 'they' know when you'd given assets away?

'They' often don't have a clue.

getmore4less wrote: »

It is the executors responsibility to check for all gifts that are PETS and document them on the IHT forms....

Yea right.:) Even professional executors like solicitors won't waste their time combing through six years worth of bank statements.

kuepper wrote: »

... It is a good idea to create a paper trail for all PETS and exempt gifts to assist the executor reporting the estate and any HMRC investigation.

On the other hand, if there is no paper trail ....

John_Pierpoint wrote: »

It is a matter of degree isn't it. Someone worth £325,000 or £650,000 is amosst sure to have left an audit trail on the HMRC computer; and then they suddenly die almost a pauper ?!?

Well quite. If the deceased's IT record shows an income of £100k a year, but the probate value of the estate is five pence, HMRC might start asking questions.

dzug1

uknick wrote: »

.

I'm thinking of getting hold of the actual probate papers from the registry to see what was actually recorded.

I rather doubt if that will help - the probate document gives very little detail, just the overall gross and net totals


I don't think they will give you a breakdown from the application form

getmore4less

antrobus wrote: »

Yea right.:) Even professional executors like solicitors won't waste their time combing through six years worth of bank statements.

IN most* cases it won't matter so clearly not needed how much interrogation of assets is needed will depend and I suspect there is some checks like assets 7 years ago against now

When disposal is missed by administrators or even when all assets are disposed of before death requiring grant or administrator it may never be found out.

IHT is a voluntary tax for most people so you take your chances.


*
around 1/2 million people die each year
around 1/2 need probate/admin(due to asset ownership)
only around 20k need to pay tax
(all are quite variable but the taxable has been going up)

With £650k nil rate band available to coupes not many need to worry

Mary_Hartnell

uknick wrote: »

My head hurts after reading that

Looking into my father's estate, I found a document yesterday quoting a probate value slightly above the threshold for estate duty. It is not the actual probate papers, just a document from a building society used to settle the mortgage with the mortgage protection he had.

One assumes therefore some amount of tax must have been paid. But, my mother is still adamant there was no tax payment. I think the solicitor doing the executorship dealt with it all and left her to get on with bringing up her young children.

I'm thinking of getting hold of the actual probate papers from the registry to see what was actually recorded.

It is the tax papers you need, the figure at the probate court can be a lot less than the beneficial ownership figure on which tax will have been calculated.

Probate is a formality, it is HMRC that cracks the whip if it is thought that there is tax to be collected. It used to be "The Capital Taxes Office" in Nottingham, but I think the command and control computer system now means the file can be delegated almost anywhere in the country.

getmore4less wrote: »

IN most* cases it won't matter


*
around 1/2 million people die each year
around 1/2 need probate/admin(due to asset ownership)
only around 20k need to pay tax
(all are quite variable but the taxable has been going up)

With £650k nil rate band available to coupes not many need to worry

Unless they live inside the M25, preferably on the west side of town, have paid off their mortgage, and have not died yet.?

How about a new TV programme called not "Heir Hunters" but "Tax Hunters" - I bet they work in similar ways.

uknick

Mary_Hartnell wrote: »

It is the tax papers you need, the figure at the probate court can be a lot less than the beneficial ownership figure on which tax will have calculated.

Probate is a formality, it is HMRC that cracks the whip is it is thought that there is tax to be collected. It used to be "The Capital Taxes Office" in Nottingham, but I think the command and control computer system now means the file can be delegated almost anywhere in the country.

Thanks for this and to dzug1.

As it happens, I spoke to the relevant probate office before I saw your answers and they pretty much said the same, so no point in pursuing that avenue.

I did ask my mother about the estate papers and what she might still have, but it's still a touchy matter she doesn't want to discuss. I think it's better to wait until I actually need to see the papers and then work out what actually happened back in the 60s

Mary_Hartnell

The danger you face is that everything is "archived" now that both solicitors and the tax men are being swamped with data. There will be resistance against getting anything out of "archive" for an executor on a fishing expedition. However you might be able to play the "I need this information to correctly fill in your IHT4xx forms" card ?

uknick

Mary_Hartnell wrote: »

The danger you face is that everything is "archived" now that both solicitors and the tax men are being swamped with data. There will be resistance against getting anything out of "archive" for an executor on a fishing expedition. However you might be able to play the "I need this information to correctly fill in your IHT4xx forms" card ?

Executor was a solicitor who died many, many years ago, and his firm no longer exists. Plus, back in the early 90s their successor sent my mother all the papers they had on the estate, which are somewhat lacking. Apparently, after an office move many papers went missing.

I've recently contacted the current firm of solicitors, actually it's the firm who took over the firm who took over the firm, if you see what I mean. They're going to see if their computer index has any record of the original estate. But, I'm not holding my breath they'll find anything else.

My mother does have a box of her financial papers and when the time comes I'll be able to access that. However, whilst she's pretty good at keeping papers (last week I saw a letter from 1971 about something relating to her finances), I'm not sure she'll have anything on my father's estate.

If the above sources can't help I suppose it's the tax office. I'm looking forward to that

Jesse_James_2

Hello all, a bit of a complicated situation, I couldn't find a similar set up in the threads.

My parents house is valued @ c.£1m (They are not rich just happened to buy in the right town when prices were much lower)

- My brother and I have recently become tenants in common with equal share with both my parents
- We are re-mortgaging their house (on a buy to let) for £600k (All 4 of us will be on the mortgage and then we will rent out this house)
- My brother & I will use this money to buy a property (in just our names) and we will all move into this house
- The original house will go on rent for two years then we may sell it & buy a house for my parents with the equity left over.

My questions are
1) Will the 7 year gifting rule apply to the new house my brother & I purchase if my parents are both living in it?
2) If we kept the original house for 7 years (It would be on rent), would we only be liable for tax on 50% of it’s value?

Thanks all

getmore4less

Jesse_James wrote: »

Hello all, a bit of a complicated situation, I couldn't find a similar set up in the threads.

My parents house is valued @ c.£1m (They are not rich just happened to buy in the right town when prices were much lower)

- My brother and I have recently become tenants in common with equal share with both my parents
- We are re-mortgaging their house (on a buy to let) for £600k (All 4 of us will be on the mortgage and then we will rent out this house)
- My brother & I will use this money to buy a property (in just our names) and we will all move into this house
- The original house will go on rent for two years then we may sell it & buy a house for my parents with the equity left over.

My questions are
1) Will the 7 year gifting rule apply to the new house my brother & I purchase if my parents are both living in it?

There will be an issue with gift with reservation or pre owned assets, the 7 years won't kick in till they move out for some of the value.

2) If we kept the original house for 7 years (It would be on rent), would we only be liable for tax on 50% of it’s value?

Thanks all

There will be CGT assessments for all of you.