IHT legal loophole

trisha

I have just seen an article in the Daily Mail which is quite a good tip

You can save more than £100,000 in inheritance tax by changing the ownership of your home from being in joint names to tenants in common, it's too complicated to give all the details.

To read it in full go to https://www.thisismoney.co.uk/iht
and look for Split your home, save a fortune.

trisha

I apologise, Paul, I didn't know about it until Wednesdays Mail, I should have checked before I posted

theGrinch

trisha people are joining and returning to these boards all the time. your post is a timely reminder! the more something is disussed the more chance it will get through...well with me anyway!

trisha

I as you know haven't read anything about it, and I suppose there might be others like me.

I think it's something that people don't think about until they are older, so it's really a minority that are interested in knowing more about it, and of course there are some people who don't want to think about anything to do with their mortality.

We are going to look into it, we aren't sure at the moment how, I suppose the first thing is to change our wills, then consult a solicitor about the Land Registry form, I have downloaded it but it looks like we have to consult one about filling it in.

theGrinch

is the article suggesting that the IR will start to challenge the notion of tenants in common after the first person has died due toa benefit accruing to the surviving person living in the property? In which case it would be suggesting a discretionary trust as giving more peace of mind.

If the IR will not challenge tenants in common, then this would be suitable for many people.

Bossyboots

trisha wrote:

I as you know haven't read anything about it, and I suppose there might be others like me.

I think it's something that people don't think about until they are older, so it's really a minority that are interested in knowing more about it, and of course there are some people who don't want to think about anything to do with their mortality.

We are going to look into it, we aren't sure at the moment how, I suppose the first thing is to change our wills, then consult a solicitor about the Land Registry form, I have downloaded it but it looks like we have to consult one about filling it in.

What form have you downloaded?

trisha

Form RX1 from the Land registry.

I found it by Googling for it.

http://www.landregistry.gov.uk/assets/library/documents/rx1.pdf

Bossyboots

The simplest way of doing this is for you to give each other notice in writing that you are severing the joint tenancy and from that date forward you hold the property as tenants in common. You then simply send this to the Land Registry.

This avoids the RX1 (which you can do yourselves if you choose but it can be quite complicated) and solicitors fees. I would think you should make this change before changing your wills and indeed, if you do it by the route of writing to each other you can do it today.

Kenny4315

In my view the whole IHT system in the UK is a total disgrace. :mad: It is supposed to be designed to target the mega rich, but it does not, as they can afford to take the steps to avoid substantial amounts, by gifting assets a long time before death.

It seems that the current government are using this along with other stealth taxes such as stamp duty, etc, to hit the middle class hard at every opportunity. :mad: If you fall into the middle bracket, then it doesn't pay to save deligently over the years and stay put in an large expensive house until you are a pensioner. My view is to downsize and retire earlier in life and then have some fun with the cash, making sure IHT doesn't then become such an issue. :beer: :j :rotfl: :cool:

sneekymum

The people who are really hit by IHT are those who were hoping to inherit that money that the tax man got instead. These are not necessarily middle class or rich and may never get the opportunity to retire early and have some fun with the cash...

trisha

Bossyboots wrote:

The simplest way of doing this is for you to give each other notice in writing that you are severing the joint tenancy and from that date forward you hold the property as tenants in common. You then simply send this to the Land Registry.

My neighbour has the house in his name only, so would they still have to write to each other, or should he just write to his wife informing her of the joint tenancy?