IHT Payment Advice

getmore4less

CJSA wrote: »

Thank you 'troubleparadise' and 'Keep pedalling',
I hope my figures are wrong, but the estate seems to come out at around £1,100k: crudely, house £200k, shares & investments £790k, other £20k-£35k.
As I understand the system, bequests from my father and a gifts from my mother to various family members all within the last 4 years (and entered on her tax returns) are liable for IHT 'clawback' reducing the IHT allowance to £160k......

Are you sure about this bit?

Any bequests(and PETS) from your father that don't qualify for exemptions(spouse/charity...) use up his nill rate band.

Anything left gets converted to a % for uplift to mothers band(as it happens it is the same as whats left) so she starts out with £325k+ the left over from dads £325k.

You then deduct any PETS(gifts) your mother made in the last 7years from her allowance.



With this amount at stake it is going to be well worth a IHT tax espert having a look over the data.

MichelleUK

Are the shares and investments held via a large broker?

I was recently involved with an IHT case and the deceased had a large portfolio with Hargreaves Lansdown. HL sold enough investments to cover the IHT and paid it directly to HMRC. Probate was then granted and then the remaining investments were sold.

HappyHarry

I was recently involved with an IHT case and the deceased had a large portfolio with Hargreaves Lansdown. HL sold enough investments to cover the IHT and paid it directly to HMRC. Probate was then granted and then the remaining investments were sold.

Unless I am very out of date, this seems somewhat unusual, unless the assets were jointly held with a survivor.

Normally it is a catch-22 situation - the Inheritance Tax needs to be paid before probate is granted, and assets can not be sold until probate is obtained.

As g6jns said, it is common to arrange bridging finance through a solicitor in such cases.

MichelleUK

HappyHarry wrote: »

Unless I am very out of date, this seems somewhat unusual, unless the assets were jointly held with a survivor.

Normally it is a catch-22 situation - the Inheritance Tax needs to be paid before probate is granted, and assets can not be sold until probate is obtained.

As g6jns said, it is common to arrange bridging finance through a solicitor in such cases.

No, it was held in a sole name only.

If you think about it, it is not really any different to the bank releasing the payment or NS&I selling premium bonds to pay the IHT (which they both will do)

There are, of course, many hoops to jump through to prove that you are the executor etc, indemnities and the requirement that they pay HMRC directly themselves.

Have a read of this:
http://www.telegraph.co.uk/finance/personalfinance/tax/10951834/Can-I-use-inherited-Premium-Bonds-to-pay-my-inheritance-tax-bill.html it also mentions other investments.

HappyHarry

No, it was held in a sole name only.

If you think about it, it is not really any different to the bank releasing the payment or NS&I selling premium bonds to pay the IHT (which they both will do)

There are, of course, many hoops to jump through to prove that you are the executor etc, indemnities and the requirement that they pay HMRC directly themselves.

Have a read of this:
http://www.telegraph.co.uk/finance/personalfinance/tax/10951834/Can-I-use-inherited-Premium-Bonds-to-pay-my-inheritance-tax-bill.html it also mentions other investments.

MichelleUK, thank you. Genuinely.

I was certain you were wrong, and quoting a Daily Telegraph article is a little like a red rag to a bull.

So I did some digging. Then I did some more digging.

I found out that you are, of course, quite correct. Under certain conditions, and if the broker agrees, investments can be sold prior to probate to fund inheritance tax.

For years I have been taught, and have read, that this can't be done. But it can.

This is one very good reason why I read and sometimes take part in these discussions, to share knowledge and to learn.

OP, as MichelleUK has mentioned, if the investments are held with a broker, it could be worthwhile speaking to them to see if they could sell investments and pay the inheritance tax bill.

Thanks again MichelleUK.

getmore4less

One thing I suspect with shares held in a nominee account is that the legal owners are the brokers acting as trustees for those with the beneficial interest so can still operate the account under the terms of the trust. which may allow dealing and release of fund s for such things as TAX.

It is possible that this will be more difficult for direct holdings as the grant will probably be needed to get any changes on the share register.

thestens

See a STEPs registered solicitor. We thought we were due to pay a large IHT bill. Our solicitor found ways round it and we owed nothing. He was certainly worth his money!