Interactive Investor - calculation of 25% tax free cash when holding Index Linked Gilts

DRS1

phlebas192 said:

As others have mentioned, it is perhaps worth pursuing how they value portfolios for probate because if they were to use the clean price for ILGs then they would fall well short of their duties to the executors, including to the extent that executors who relied on such obviously incorrect "valuations" would be liable for additional IHT and even prosecution.

But on a practical level, if you can establish that another provider will give a correct valuation then it would seem best to transfer to them, enact the crystallisation, and you can always transfer to another provider (even back to ii!) once you have received the PCLS.

Are you sure about that?  Aren't SIPPs currently outside the scope of IHT and don't they fall outside the member's estate on death (even after the changes proposed for 2027)?

leosayer

phlebas192 said:

As others have mentioned, it is perhaps worth pursuing how they value portfolios for probate because if they were to use the clean price for ILGs then they would fall well short of their duties to the executors, including to the extent that executors who relied on such obviously incorrect "valuations" would be liable for additional IHT and even prosecution.

But on a practical level, if you can establish that another provider will give a correct valuation then it would seem best to transfer to them, enact the crystallisation, and you can always transfer to another provider (even back to ii!) once you have received the PCLS.

Another method would be to sell all IL Gilts to cash, take the lump sum and then buy them back.

squirrelpie

leosayer said:

Another method would be to sell all IL Gilts to cash, take the lump sum and then buy them back.

Indeed. Or buy a single ILG and then sell it, to establish the price.

phlebas192

DRS1 said:

phlebas192 said:

As others have mentioned, it is perhaps worth pursuing how they value portfolios for probate because if they were to use the clean price for ILGs then they would fall well short of their duties to the executors, including to the extent that executors who relied on such obviously incorrect "valuations" would be liable for additional IHT and even prosecution.

But on a practical level, if you can establish that another provider will give a correct valuation then it would seem best to transfer to them, enact the crystallisation, and you can always transfer to another provider (even back to ii!) once you have received the PCLS.

Are you sure about that?  Aren't SIPPs currently outside the scope of IHT and don't they fall outside the member's estate on death (even after the changes proposed for 2027)?

Indeed, SIPPs are still outside IHT, but I was thinking about how they value ISAs and GIAs. If they use the clean price for those then that would be undervaluing the estate and if they can value those correctly for IHT purposes then there is no reason why they cannot do so for SIPP valuations.

leosayer

phlebas192 said:

DRS1 said:

phlebas192 said:

As others have mentioned, it is perhaps worth pursuing how they value portfolios for probate because if they were to use the clean price for ILGs then they would fall well short of their duties to the executors, including to the extent that executors who relied on such obviously incorrect "valuations" would be liable for additional IHT and even prosecution.

But on a practical level, if you can establish that another provider will give a correct valuation then it would seem best to transfer to them, enact the crystallisation, and you can always transfer to another provider (even back to ii!) once you have received the PCLS.

Are you sure about that?  Aren't SIPPs currently outside the scope of IHT and don't they fall outside the member's estate on death (even after the changes proposed for 2027)?

Indeed, SIPPs are still outside IHT, but I was thinking about how they value ISAs and GIAs. If they use the clean price for those then that would be undervaluing the estate and if they can value those correctly for IHT purposes then there is no reason why they cannot do so for SIPP valuations.

Do II perform probate valuations? 

It's a different capability to providing a platform for investment.

phlebas192

leosayer said:

phlebas192 said:

DRS1 said:

phlebas192 said:

As others have mentioned, it is perhaps worth pursuing how they value portfolios for probate because if they were to use the clean price for ILGs then they would fall well short of their duties to the executors, including to the extent that executors who relied on such obviously incorrect "valuations" would be liable for additional IHT and even prosecution.

But on a practical level, if you can establish that another provider will give a correct valuation then it would seem best to transfer to them, enact the crystallisation, and you can always transfer to another provider (even back to ii!) once you have received the PCLS.

Are you sure about that?  Aren't SIPPs currently outside the scope of IHT and don't they fall outside the member's estate on death (even after the changes proposed for 2027)?

Indeed, SIPPs are still outside IHT, but I was thinking about how they value ISAs and GIAs. If they use the clean price for those then that would be undervaluing the estate and if they can value those correctly for IHT purposes then there is no reason why they cannot do so for SIPP valuations.

Do II perform probate valuations? 

It's a different capability to providing a platform for investment.

They provide account valuations to the executor, many of whom aren't likely to understand the implications of ILGs valued at clean prices and hence take the valuation at face value.

From https://www.ii.co.uk/help/using-your-account/account-administration/account-holder-has-passed-away "We will also send you information regarding probate applications and account valuations"

michaels

I assume no one else is thinking this sounds like a potential inheritance tax dodge....

leosayer

phlebas192 said:

leosayer said:

phlebas192 said:

DRS1 said:

phlebas192 said:

As others have mentioned, it is perhaps worth pursuing how they value portfolios for probate because if they were to use the clean price for ILGs then they would fall well short of their duties to the executors, including to the extent that executors who relied on such obviously incorrect "valuations" would be liable for additional IHT and even prosecution.

But on a practical level, if you can establish that another provider will give a correct valuation then it would seem best to transfer to them, enact the crystallisation, and you can always transfer to another provider (even back to ii!) once you have received the PCLS.

Are you sure about that?  Aren't SIPPs currently outside the scope of IHT and don't they fall outside the member's estate on death (even after the changes proposed for 2027)?

Indeed, SIPPs are still outside IHT, but I was thinking about how they value ISAs and GIAs. If they use the clean price for those then that would be undervaluing the estate and if they can value those correctly for IHT purposes then there is no reason why they cannot do so for SIPP valuations.

Do II perform probate valuations? 

It's a different capability to providing a platform for investment.

They provide account valuations to the executor, many of whom aren't likely to understand the implications of ILGs valued at clean prices and hence take the valuation at face value.

From https://www.ii.co.uk/help/using-your-account/account-administration/account-holder-has-passed-away "We will also send you information regarding probate applications and account valuations"

That's rather imprecise wording from II.

Lowtrawler

leosayer said:

Another method would be to sell all IL Gilts to cash, take the lump sum and then buy them back.

I can see 2 options for me if the Ombudsman does not find in my favour. That is one, the other is to do an in-precis transfer to another provider who treats IL gilts correctly.

As I have said earlier, I have not yet suffered any loss and have plenty of time to address the potential loss. I am pursuing to the Ombudsman  because:

(a) I think ii are wrong to be doing this,
(b) Any investor holding IL gilts who has previously claimed a PCLS will have lost out and a suitable finding from the Ombudsman is likely to see them retrospectively compensated.
(c) To prevent any loss to future IL holders claiming a PCLS.

Earlier in the thread, it was confirmed that Charles Stanley treat IL gilts correctly. It also appeared Hargreaves Lansdown will make a correcting adjustment when claiming a PCLS.

Can anyone confirm:

(1) Whether AJ Bell or Fidelity correctly treat IL gilts for the PCLS?
(2) If HL do make the correcting adjustment as previously thought?

Lowtrawler

Another disappointment. AJ Bell have confirmed they apply the same treatment as Interactive Investor.

The Ombudsman has confirmed my complaint and I will advise when there is any progress.