What to do with royalties

charleyfarleycat

Hi there

I'm after advice about royalties. I have almost completed form IHT205 as my father left everything to my mum and it is relatively straight-forward. However, we had both overlooked the fact that my father was receiving royalties for books he had published in the States. We're not talking much, maybe $200 in 2013. Does this mean I now have to fill out a different form (IHT 400), and what do I do with future earnings? Do they just go to my mum and then she pays income tax on them?

Any thoughts would be great.

Thanks.

madbadrob

I am not so sure of the answer to your specific questions but I know that royalties will be paid for 75 years after the death of your father when copyright will cease. These go to your fathers estate each year and then should be paid to the beneficiary as per the will if one exists. If you are talking about small amounts per year and assuming your mother is not a tax payer I would say the sums wouldnt push her above the tax threshold and could be ignored in the future. With regards to IHT I expect some one else on the boards could advise you further

Rob

charleyfarleycat

I know the accounts office in the States is happy to make my mother the beneficiary with evidence of the death certificate etc, and they will make future payments to her. She is a tax payer so she will have to add it to her self-assessment, however, it's how to account for it on the IHT forms that I'm not really sure about as it's an intangible asset. Things were rather uncomplicated until now, and I'm hoping to keep it that way!

getmore4less

I remember this coming up somewhere before, I think there are some guidelines.

HMRC website is usualy good if you get the right terms in a search as most of the manuals the tax people use are available and that is what they use.

I think as the asset passes to the spouse there will be no IHT to pay so there will be less intersest in how accurate you asses the capital value for IHT allthough next time this may be more important if the royalties are still coming in.

I use google HMRC word1 word2 ...
https://www.google.co.uk/#q=hmrc+inheritance+tax+royalties

finds stuff

Intangible assets


Intangible assets are non-financial fixed assets that do not have a physical substance but are identifiable and controlled through custody or legal rights. They include:

• goodwill (including know how)
• registered trade marks/brand names
• intellectual property rights such as copyright, patents and design rights
• publishing rights
• franchises, dealerships and licenses

Identification of intangible assets can be very difficult and involve a range of complicated issues, especially in respect of intellectual property. You may want to seek specialist guidance if the circumstances of your case are complex.

Intangible assets are often valued either on a multiple of profit/income stream or using a discounted cash flow. When submitting a valuation of an intangible asset you should consider and provide details of:

• a full description of the asset and the taxpayers rights over the asset
• how the profit/income stream and/or any projections were arrived at and any adjustment you have made
• how you arrived at your profit/incomes multiple and/or discount rate

Edit and this
http://www.hmrc.gov.uk/manuals/ihtmanual/IHTM10155.htm

charleyfarleycat

Thanks. Does anyone know whether this means I now have to complete a different form to the one I had originally looked at - IHT205? Ie can intangible assets be included on this form or do they have to be calculated on another?