Mitigating IHT

castle96

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)

booksurr

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

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

Sons liability. Why would he spend more. The person talking to him swears he did this and paid no tax.

uknick

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

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

Has the father actually died?

Keep_pedalling

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

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

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

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