inheritence tax and the budget

fartington

do not want replies from people who say I should just pay it and be happy!! not interested in that, alot/most other countries do not have it and it is double taxation....

my mum (no dad, at all so no double allowance ) has recently already downsized from high value london house and moved to her Spain flat, due to arthritis and weather and she has my sister there to keep an eye on her.

money is in cash in UK,

so given the budget is just talking about inheritence tax limit rising on houses, this does not apply to her cash - right?

I know they are talking about a bolt-on credit for downsizers, but assume that might be for people who downsize in UK and also would it be retrospective, ie. does it only kick-in in 2017

40% is alot to pay and is the threshold for cash anything above 500 or still the old 325 ??.

zygurat789

Cash/property it doesn't matter, what does matter is where it is. You may have to pay IHT in Spain as well. You need a solicitor versed in Spanish law. £325,000 or £500,000 find out this afternoon.

fartington

I am not refering to spain property, just the UK stuff.

from previews, it seems it is on properties not cash...will have to see......it would be a shame if she moved to early to benefit....

lincroft1710

fartington wrote: »

I am not refering to spain property, just the UK stuff.

from previews, it seems it is on properties not cash...will have to see......it would be a shame if she moved to early to benefit....

Your mother hasn't moved too early as she would not be subject to IHT, her estate might be though.

mgdavid

fartington wrote: »

I am not refering to spain property, just the UK stuff.
.........

who has told her/you that Spanish tax on Spanish residents' estates doesn't include cash held abroad?
As said earlier you would do well to take professional advice.

purdyoaten

mgdavid wrote: »

who has told her/you that Spanish tax on Spanish residents' estates doesn't include cash held abroad?
As said earlier you would do well to take professional advice.

Indeed - not least because in many areas of Spain succession tax (as they like to call it) is devolved to many areas. In Valencia, Murcia and The Balearics up to 99% of an estate could be tax free!

The big issue at the moment are the plans to tax residents and non-residents different rates and apply different rules.

spenderdave

From the Budget report (https://www.gov.uk/government/publications/summer-budget-2015):

"1.196 From April 2017 the government will also introduce new rules so that
everybody who owns residential property in the UK and would otherwise pay
inheritance tax on that property cannot avoid paying it by holding it in an offshore structure. These changes will limit abuses of the rules by people with non‑domicile status who use complicated structures to make their UK homes look like offshore assets."

It looks like they have thought about that one.

Keep_pedalling

"it is double taxation...."

I beg to differ, but most IHT does not hit money previously taxed as earnings, but money that has been accumulated through things like house price inflation. Certainly with our estate every penny of IHT that gets paid will come through house price inflation and inherited income none of which we have paid a penny of tax on.

I am like you though not happy about the stupid linkage of this increased allowance to property ownership, which is both unfair (not to us though, unless we both end up in a care home) and potentially damaging to housing market.

Very few people take over their parents old homes they just sell and take the cash. All assets should be treated the same way and there sould be no additional pressure to hang on to a house just to protect an inheritance.

fartington

yes agreed, but she is not holding money abroad. the money is held in UK.

she could move the money to spain but prefers not to, due to uk being 'safer' bank and currency-wise. She might have to do that though, not sure if that is an 'abuse', but she was told that if she lives in spain for at least 3 years and money is out of uk, no IH is payable on it - she still however prefers uk for her money...

therefore she is not holding the money offshore right now, but if she does move it offshore eg. spain, she will also be in spain, so not really same as
the rule -1.196 From April 2017 - which applies to homes in offshore structures anyway.

she has had flat in spain for many years, and has gone there. she has a burial plot there.

she has no home in UK anymore, it was sold to downsize but then she decided to go to spain.

correct - prof advise has been taken and there is no IH payable in her area of spain, we have it in writing from the government actually...

my question - if she is in spain property for over 3 years but leaves her cash here, what is the threshold payable, assuming from todays news it is still 40% over 325?

mgdavid

fartington wrote: »

yes agreed, but she is not holding money abroad. the money is held in UK.

she could move the money to spain but prefers not to, due to uk being 'safer' bank and currency-wise. She might have to do that though, not sure if that is an 'abuse', but she was told that if she lives in spain for at least 3 years and money is out of uk, no IH is payable on it - she still however prefers uk for her money...

therefore she is not holding the money offshore right now, but if she does move it offshore eg. spain, she will also be in spain, so not really same as
the rule -1.196 From April 2017 - which applies to homes in offshore structures anyway.

she has had flat in spain for many years, and has gone there. she has a burial plot there.

she has no home in UK anymore, it was sold to downsize but then she decided to go to spain.

correct - prof advise has been taken and there is no IH payable in her area of spain, we have it in writing from the government actually...

my question - if she is in spain property for over 3 years but leaves her cash here, what is the threshold payable, assuming from todays news it is still 40% over 325?

you seem very confused.
You say she lives in Spain and does not have a home in UK.
Therefore she is a Spanish resident.
Spain and UK are different countries, foreign to each other.
Therefore FROM HER POINT OF VIEW she is holding cash offshore in a foreign country.

fartington

correct - she has just gone to a foreign country, and needs to live now for 3 more years at least to be classed as foreign resident.
not sure if she needs to register as a spanish citizen or not....will have to check.

basically if you are out of UK for 3 years then all non-uk money is not subject to uk IH. but I am talking about her UK monies.....

what I was confused about was how much, even after 3 years, she can safely keep in UK, what I do not want is any problems with UK IH being payable. She could move monies apart from the threshold from the UK to be on the safe-side, but not sure if it would be 325 or 500 for her situation!

I will assume it is 325. but if it was 500 that would be helpful...