Inheritance Tax Con By Chancellor

antenna

For a single person the inheritance threshhold is still 300,000 pounds..........the just announced 600,000 pounds threshhold is only for married couples or civil partnerships.........how does it work...the first to die has 300,000 pounds maximum to leave to their partner who can carry it forward to when They die.....sort of "tax paid for the future"

antenna

An example......at the first death of an estate valued at 240 thousand pounds the value is 120,000 each....ok 120000 pounds is the allowance against future inheritance tax on the survivors estate.......in say 15 years the survivor dies with an estate now of 700,000 pounds the survivor has n allowance of their own 300,000 and the wrapped inheritance tax free of 120,000 pounds making a inheritance allowance of 420,000 pounds...leaving death duties to be paid on 280,000 pounds......not as you may think 100,000 pounds........................if you know better i welcome being corrected...

EdInvestor

Not quite sure where you got this from but it appears to be wrong. Spousal IHT allowance of 300k is transferable in its entirety to surviving spouse whose allowance rises to 600k.

This can be done now, but it involves a lot of expensive hassle with solicitors, will writers, financial advisors etc setting up trusts, variations on house ownership and new wills,etc. That won't now be necessary.

_gav_

Can somebody explain in simple terms what this actually means? Are we now saying within a "marriage" if one person dies, the £300k allowance is transferrable to the surviving partner, who then has £600k allowance to pass down onto children without incurring the theft known as IHT? Were as before, they would only have had £300k before IHT? (This exludes trusts etc).

loulou41

EdInvestor wrote: »

Not quite sure where you got this from but it appears to be wrong. Spousal IHT allowance of 300k is transferable in its entirety to surviving spouse whose allowance rises to 600k.

This can be done now, but it involves a lot of expensive hassle with solicitors, will writers, financial advisors etc setting up trusts, variations on house ownership and new wills,etc. That won't now be necessary.

Still a bit confused, what happens when the surviving spouse dies? If she leaves everything to her children and her house & assets is 700k. Will the children pay inheritance on 600k or 300k? E.g my friend house is worth 450k and she is a widow and as such is she counted a single person with 300k? Thanks

_gav_

Scrub my request, found the answer in this http://forums.moneysavingexpert.com/showthread.html?t=571597

jem16

loulou41 wrote: »

Still a bit confused, what happens when the surviving spouse dies? If she leaves everything to her children and her house & assets is 700k.Will the children pay inheritance on 600k or 300k?

The first £600k is tax-free. So if the total estate is £700k, £100k is subject to inheritance tax at 40%.

E.g my friend house is worth 450k and she is a widow and as such is she counted a single person with 300k? Thanks

As she is a widow, she has a tax-free allowance of £600k (assuming her husband did not leave anything to anyone other than his wife) so no inheritance tax would need to be paid on £450k.

robledouk

Hi,

My father passed away last year with the total estate including my mums around 600k. We used a little of the Nil Band rate as most of the value is the house which was planning on being sold and some more money being put into the trust fund (285k last year)

But I:m a bit confused about the new IHT ruling.

Will the chidren (sister and I) still be affected should my mum pass away because it:s been raised to 600k? or will the new ruling mean we wont be affected?

I dont know what the rule is if a spouse passed away last year. Are we still taxed on anythng over 285k(last years nil band rate)?

Thanks in advance

Tiggs_2

robledouk wrote: »

Hi,

My father passed away last year with the total estate including my mums around 600k. We used a little of the Nil Band rate as most of the value is the house which was planning on being sold and some more money being put into the trust fund (285k last year)

But I:m a bit confused about the new IHT ruling.

Will the chidren (sister and I) still be affected should my mum pass away because it:s been raised to 600k? or will the new ruling mean we wont be affected?

I dont know what the rule is if a spouse passed away last year. Are we still taxed on anythng over 285k(last years nil band rate)?

Thanks in advance

sounds simple enough - on 1st death you used 100% of the nil band to create the trust. Therefore when your mum goes she ONLY has her own nil band to use.

In effect - anyone that has already done a DWT is now (a little) worse of in terms of tax saving and hassle than anyone that didnt bother.

jem16

sloughflint wrote: »

I wonder what professional people who post on here regularly ( localhero springs to mind) will be recommending to:
1. new clients

Tiggs (who posted on one of the other threads) is recommending people don't go down the trust route now.

From memory he is a financial adviser who specialises in inheritance tax planning.

Willman_Rodders

Hi sloughflint,

When you visited your family solicitor did he/she explain to you the risks of the discretionary trust? (e.g. Your trustees can call in the loan?) Did he/she mention the extra work involved for the trustees after the first death (e.g. annual meeting of the trustees?, the need for professional investment advice?)

Just a thought. Do you want your trustees to have all that extra hassle when it is avoidable (and I suspect you can save money in the process)?

I have been looking at my professional body's website; the posts there are all similar in theme ... wait to see what the fine print says but assume the need for a discretionary trust and tenancy severance, and expressions of wish etc are no longer relevant to basic IHT planning.

If the proposed changes mentioned yesterday do become law then I will not be recommending my married clients take out NRB Discretionary trusts. It is early days though, and my suggestion would be to defer the process until a clearer idea of what is being offered is known.

I too would be interested to hear what your solicitor says; I'd hope he'd advise redrafting the will without the NRB DT clauses and wait to see how things pan out.

Incidentally, you might be interested in this link.... (I have posted it elsewhere so my apologies if you have aready read this)

http://www.hmrc.gov.uk/pbr2007/supplementary.htm

and scroll down to .... Inheritance Tax: transfer of unused nil-rate band (PDF 207K)

Disregard the first 11 pages (they are for lawyers & fellow will writers to digest) but the following pages (12- 15) are explanatory notes giving more information including what effect the changes will have on existing wills that include the NRB DT. Page 16 gives some useful examples.

Hope that helps.