Inheritance tax avoidance help - who to consult

littlebranshill

SuperHan wrote: »

A good accountant will certainly have either sufficient legal knowledge or contacts. Equally a STEP qualified lawyer should be qualified for inheritance tax planning, however as an accountant that does a lot of IHT planning, we tend to lead on the tax planning side and instruct lawyers accordingly.

Who are you planning on leaving your estate to? If you leave it all to charity, there's no IHT to pay...

I want to leave it to my goddaughter and a friend. Didn't want to leave it to charity.

Keep_pedalling

littlebranshill wrote: »

I want to leave it to my goddaughter and a friend. Didn't want to leave it to charity.

Even after tax, they will be receiving considerable sums of money. You should certainly consider making use of of some of it yourself though other wise what is the point of holding considerable wealth just for other people to spend the l it after you have gone.

If you friend is of similar age to you, it might be worth considering their tax situation, and if your gift would cause them a similar issue.

adonis10

lincroft1710 wrote: »

Why do people worry so much about inheritance tax? They certainly won't pay it! Their beneficiaries if non spousal will have have a windfall anyway.

Probably because they would rather not have something (over and above the relevant threshold) that has already been taxed multiple times already throughout their life being taxed again at 40%.

Keep_pedalling

adonis10 wrote: »

Probably because they would rather not have something (over and above the relevant threshold) that has already been taxed multiple times already throughout their life being taxed again at 40%.

Most ordinary folk only fall into IHT territory because of the escalating value of their home. None of that capital gain has been taxed. Every part of our estate over our nil rate bands has either come through house price increase, capital gains though from investments or inherited money. We have not paid a penny of tax on any of that.

kidmugsy

Keep_pedalling wrote: »

Every part of our estate over our nil rate bands has either come through house price increase, capital gains though from investments or inherited money. We have not paid a penny of tax on any of that.

Lucky old you. Ours has all come from taxed earnings.

Keep_pedalling

kidmugsy wrote: »

Lucky old you. Ours has all come from taxed earnings.

I think you will be in the minority there, and it certainly won’t be the same for your beneficiaries who will be receiving a large chunk of unearned income.

getmore4less

IHT is probably the most voluntary tax payable as with proper planning it can be eliminated.

That's why 1/2 million people die each year and less than 5% pay any IHT and only 1.25% are over £1m
40% of the revenue collected is from estates over £2m
80% of the revenue from over 75's
60% of the revenue from over 85s

CGT is another voluntary one but you have to die for that to work.

kidmugsy

getmore4less wrote: »

IHT is probably the most voluntary tax payable as with proper planning it can be eliminated.

OK; tell us how the OP can eliminate it.

Keep_pedalling

kidmugsy wrote: »

OK; tell us how the OP can eliminate it.

With hind site having nearly all your wealth tied up in property makes it pretty tricky, as the best way to eliminate or reduce IHT is to off load a good chunk of it while you are alive, which is not easy to do in chunks with illiquid assets like property. The OP has a double problem in that, he can’t just give the second property away without incurring a CGT liability.

They could move into the rented property and make a gift their current primary residence, which would avoid the CGT tax issue, and provided they lived another 7 years that would take a large chunk away from their estate, but that could only be done if they are not dependant on the rental to maintain their standard of living.

Keep_pedalling

getmore4less wrote: »

IHT is probably the most voluntary tax payable as with proper planning it can be eliminated.

That's why 1/2 million people die each year and less than 5% pay any IHT and only 1.25% are over £1m
40% of the revenue collected is from estates over £2m
80% of the revenue from over 75's
60% of the revenue from over 85s

CGT is another voluntary one but you have to die for that to work.

You can save quite a bit during your lifetime making use of your annual allowances and the use of S&Ss ISAs. In the last 5 years we have managed to shift around £80k of gains from our GIA to our ISA accounts and there will be another £20k to shift this year (unless the market crashes before April). All the gains held in ISA accounts are also tax free, unfortunately it is not possible to do these things with property, so yes if property is your thing you have to die to avoide it.