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Mitigating IHT

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castle96
castle96 Posts: 2,979 Forumite
Part of the Furniture 1,000 Posts
Hi,
a friend has calculated his IHT liability (incl. the 5/17 £100k allowance re his father leaving the house to him - he curently lives in it). This leaves him with a liabilty of £80k.

He has been 'told', that he 'simply' needs to 'create' another beneficiary for £80k and this tax liability will disappear ! "No solicitor will tell you this but it works"

??? Surely not. The liabilty is there. The tax man wants his money ? It doent matter how many beneficiaries there are in the will, or created after.... does it ?

Advice please. (He has sought legal advice, but this was not mentioned)
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Comments

  • booksurr
    booksurr Posts: 3,700 Forumite
    castle96 wrote: »
    (He has sought legal advice, but this was not mentioned)
    so did he seek legal advice about this "idea"

    the fact it has not been mentioned is because, as you say, it is rubbish
  • Keep_pedalling
    Keep_pedalling Posts: 20,818 Forumite
    Tenth Anniversary 10,000 Posts Name Dropper Photogenic
    Who's tax liability are we talking about, the son or father? Once you have died there is nothing that can be done about IHT.

    If we are talking about the son, he simply needs to spend more :)
  • castle96
    castle96 Posts: 2,979 Forumite
    Part of the Furniture 1,000 Posts
    Sons liability. Why would he spend more. The person talking to him swears he did this and paid no tax.
  • uknick
    uknick Posts: 1,768 Forumite
    Part of the Furniture 1,000 Posts Name Dropper
    castle96 wrote: »
    Sons liability. Why would he spend more. The person talking to him swears he did this and paid no tax.

    Was it a man in a pub? :)
  • castle96
    castle96 Posts: 2,979 Forumite
    Part of the Furniture 1,000 Posts
    no. it was a guy who did legal training when younger, is most pedantic and thourough. He swears they did this when his step-father died. I have also Q'd him on this. He says 100%. I just cannot see it myself
  • xylophone
    xylophone Posts: 45,608 Forumite
    Part of the Furniture 10,000 Posts Name Dropper
    Has the father actually died?
  • Keep_pedalling
    Keep_pedalling Posts: 20,818 Forumite
    Tenth Anniversary 10,000 Posts Name Dropper Photogenic
    castle96 wrote: »
    Sons liability. Why would he spend more. The person talking to him swears he did this and paid no tax.

    The son has no liability to pay tax for his father that is down to the estate. By his liability I was referring to actions he could take to reduce the tax liability for his own estate. Unless his father is still alive there is nothing that can be done to reduce IHT due on his estate.
  • getmore4less
    getmore4less Posts: 46,882 Forumite
    Part of the Furniture 10,000 Posts Name Dropper I've helped Parliament
    castle96 wrote: »
    Hi,
    a friend has calculated his IHT liability (incl. the 5/17 £100k allowance re his father leaving the house to him - he curently lives in it). This leaves him with a liabilty of £80k.

    He has been 'told', that he 'simply' needs to 'create' another beneficiary for £80k and this tax liability will disappear ! "No solicitor will tell you this but it works"

    ??? Surely not. The liabilty is there. The tax man wants his money ? It doent matter how many beneficiaries there are in the will, or created after.... does it ?

    Advice please. (He has sought legal advice, but this was not mentioned)

    given the level of misunderstanding that can happen perhaps a breakdown of how this calculations was done and concluded there was an £80k bill.
    The use of £100k suggests that only 1nill rate band is in use which may be incorect if there is/was a spouse in the wings.
  • uknick
    uknick Posts: 1,768 Forumite
    Part of the Furniture 1,000 Posts Name Dropper
    castle96 wrote: »
    no. it was a guy who did legal training when younger, is most pedantic and thourough. He swears they did this when his step-father died. I have also Q'd him on this. He says 100%. I just cannot see it myself

    Simple solution; just get him to cite the HMRC rules that allow it.
  • castle96
    castle96 Posts: 2,979 Forumite
    Part of the Furniture 1,000 Posts
    Father alive - 92

    His NRB £325k
    " £265K for mother (dec'd)
    £100K in 4/17 for house to son
    £690

    Estate
    £300 house
    £600 investments

    £900 - 690 = 210 x 40% = 84 due

    true ? any 'way out' ?

    PS I was looking at the way probate fees have gone up. Was £215. Now (5/17 £4000 !!!!!! for estate of 1/2 to 1m£

    "Unless his father is still alive there is nothing that can be done to reduce IHT due on his estate." - what then ? he knows about 7yrs, £3k pa etc. AIM shares/woodlands....no use
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