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

[Deleted User]

That is a great comprehensive list xylophone and much appreciated. I have a will in place and have handled all home finances for a very long time including transfer of company pension, vesting etc and then did probate myself. I did forget about the upcoming home allowance though!

Very many thanks

Just an edit to say that if I pop my clogs before I am 75, then my beneficiaries will inherit my sipp tax free, so it makes sense to wait and not remove capital as I buy and sell within the sipp and it is consistently growing. If they get into a struggle situation then I can and will remove some capital from the sipp to help them but at the moment it is a goose with golden eggs

kizzaplough

hi all

my father has change his will to the following

he has 5 children and is intending to leave each child a property value of approx £200000 ( he has 8 property's ) and a joint property between all 5 value approx £500000.

my question is this, the tax fresh hold is £325000 then inheritance tax is 40% on the £1,175000
left. will we all have to pay our own share of this ie £80000 and jointly on the £500000 house by re mortgaging it to raise the £200000 then renting it out to pay this off. also would the £325000 fresh hold come in tax relief for each person ie £65000 each and how long do we have to pay the inheritance tax?

xylophone

Has your father's will been drafted by a solicitor?

If so, has the solicitor not advised him concerning the Inheritance Tax that is likely to be due on his estate?

https://www.gov.uk/inheritance-tax/overview

http://www.ashfords.co.uk/passing-on-the-family-home-the-new-inheritance-tax-allowance/

https://www.gov.uk/paying-inheritance-tax/yearly-instalments

If your father has not already taken advice concerning IHT, it would be as well if he did so?

Mojisola

kizzaplough wrote: »

my father has change his will to the following

he has 5 children and is intending to leave each child a property value of approx £200000 ( he has 8 property's ) and a joint property between all 5 value approx £500000.

It can be risky leaving individual properties in this way.

Your father will have to change his will if he ever sells a property or one child could be left without his/her individual share.

If one or more of the properties rises or falls in price, some of the siblings could feel very hard done by.

Keep_pedalling

Your father really should drop this idea of trying to force all his children into maintaining his property portpholio beyond the grave. If he really wants to help you he should be looking at ways of reducing the IHT bill that is going to met by the estate.

SeniorSam

It does seem to be a poorly constructed Will. However, any inheritance tax due would have to be paid when due by the executors of the estate. They may be able to negotiate a deferrment of up to 10 years by agreement with the Revenue, but with all the properties, it is likely that HMRC would insist that the tax is paid before any distribution of the estate.

Even with several properties and some may have to be sold to pay taxes does not change the fact that the estate is to be distributed between the five children, so whatever is left, then the executors can split up the estate, possibly agreeing to pass on properties to individuals if they wish, but at the valuation price. The executors are the ones that will be responsible.

Sam

A new Will would make lif easier.

Keep_pedalling

kizzaplough wrote: »

hi all

my father has change his will to the following

he has 5 children and is intending to leave each child a property value of approx £200000 ( he has 8 property's ) and a joint property between all 5 value approx £500000.

my question is this, the tax fresh hold is £325000 then inheritance tax is 40% on the £1,175000
left. will we all have to pay our own share of this ie £80000 and jointly on the £500000 house by re mortgaging it to raise the £200000 then renting it out to pay this off. also would the £325000 fresh hold come in tax relief for each person ie £65000 each and how long do we have to pay the inheritance tax?

Your sums only include 6 properties, what about the other 2? Unless they are being left to charity there will be IHT to pay on those as well.

I really feel sorry for the executor, unless he has appointed professionals, which case they will be on a nice little earner with the complexity of sorting it all out.

HarryHill

My mother recently passed away and there is under £2000 in her bank account and no other assets. Before she died she gave each of her 5 children £5000. Does this now have to be declared for IHT through the Executor?

Somerton

Nowhere in the article is Business Property Relief mentioned (BPR) After 2 year of owning assets invested in these they do not attract Inheritance tax, but what I would like to know is do they affect the new main Residence relief. I have read that unlike Trusts, gifts, reliefs and exemptions they are added back into any calculation of the new main residence nil rate band. Is there a tax expert out there who can enlighten me?
Somerton

SeniorSam

Do not go to any Bank or Building Society for Inheritance Tax planning. They are only interested in how much they can obtain in fees and ongoing charges. A good STEP Solicitor should be able to arrange all you need, but do compare quotes from different solicitors. A married couple each have an inheritancr tax free allowance of £325,000, so a married couple would need to have an estate of over £650,000 before any IHT would be payable. NEVER accept the first quotation you obtain for advice, there is often lower costs elsewhere.
Sam