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We’re pleased to announce the release of our new IHT report, detailing up to date allowances, reliefs and tax rates.
As always, we offer free initial consultations for all clients with IHT concerns, so get in touch today.
Please note that this post is now over 3 years old and we have found that offering a free 30 minute consultation to clients has been far more useful to determine if there is an IHT issue and how to deal with it. To request a consultation please click here and give a few brief details of your circumstances and we’ll arrange a time to speak with our experts.
Like to view my account ( inheritance tax payments ) recently on line???
I want to gift £5k per year to each of my 2 sons indefinitely.
Without the complication/expense of trusts, what is best way?
Hi John
I’ve emailed you privately, but in simple terms, you have a £3,000 annual allowance which will exempt part of the gifts, on top of this there is a further exemption for gifts out of income (along with small gifts exemptions and marriage exemptions).
Where gifts exceed your annual allowances they will start to eat into your £325,000 nil rate band, but will drop out of account after 7 years. Please get in touch if you would like to discuss further.
Anthony
I have a will and my only child (son) is the executor and only benifactor .
I am a widower 78 and about to be married again
Do I have to make another will? I don’t wish to cut him out but also wish to provide for my future wife.
I wish to give away surplus income to children & grandchildren ,what procedures must I adopt to ensure I will satisfy the Inland Revenue ?
If you download form IHT403 from here IHT403 the last page has a template for gifts out of income. If you can keep a record in line with this it will allow your executors to satisfy HMRC after your death without needing to dig through years of bank statements. Just make sure your executors know where to look for it!
I am 73. I would like to gift my adult offspring my rented out flat. What I want to know is can I keep getting the rent myself as I can’t manage without it
Hi Christine, if you gift the property but continue to retain the income HMRC will treat this as a ‘gift with reservation’ which means that you will be treated as if you still own the property for inheritance tax purposes. You will also be treated as if you have sold the property for capital gains tax and any gain will be immediately taxable. It is possible to pass the asset into trust and avoid the immediate crystallisation of the gain, but depending on your circumstances this may not be the best option. I’ll drop you an email and perhaps we can discuss this further. Kind regards
Anthony
anthony@fusionpartners.co.uk
I am 74 years old and have 3 rental properties. Can I form a company and make my 3 daughters shareholders in order to avoid inheritance tax.
Can I gift my own home to my eldest daughter and pay rent to continue living in the property.
Hi Antoinette, if you transfer your properties into a company it will trigger capital gains tax and stamp duty on the transfer. It will also be a disposal for IHT purposes remaining in your estate for 7 years, so please take advice before undertaking any transactions.
In respect of your home, you can gift this to your daughter without CGT or stamp duty (assuming it has always been your home and there is no mortgage) and if you then pay her market rent this will start to remove the property from your estate over the next 7 years. However, it’s important to note that she will suffer income tax on the rent and you will then lose the ability to claim the residence nil rate band.
The final point is a question to consider is whether you have an inheritance tax problem in the first place as you could have up to £425,000 of allowances today or possibly £850,000 if you are a widow.
My father has just recently passed away . He lived with my mother on top of a shop with my mother who is still alive . Me and my brother run a business which he initially set up for us . Originally it was running a sole trader. But for the last 13 years me and my brother have been running the business as a limited company.
My father had no interest in the business officially but helped out as he was retired as does my mum currently on a free basis.
We also do not pay any rent to my parents but have been paying for their up keep as in all their bills etc
Can we still get 100% business tax relief on the death of my mother as the entire property shop and flat above automatically got passed to my mother
Hi Juan
Sorry for the delay in coming back to your query. As the building has not been used by your father’s business for the past 2 years it is unlikely that business relief will be available for the property. If he was a shareholder in the company that runs the business then it is possible that business relief at 50% may be available.
There may be an opportunity to plan for your mother’s estate, although without resorting back to your mother running the business as a sole trader for two years this is likely to be limited – please get in touch if you want to discuss this further.
Anthony Rogers CTA
My mother owns her own house and another house that is rented out.
It has been advised that she should sell her rented property and invest in AIM to minimise inheritance tax. Is this a good idea?
Hi Barbara
What’s right for your mother will be very much dependent on her circumstances and the type of investments they are looking to place the proceeds into. There is also the question of capital gains tax on the disposal, along with the issue of your mother’s health and needs.
In the right circumstances AIM and other BPR qualifying investments can be a good idea. In the wrong circumstances they can be a very bad idea, particularly if the companies she invests into fail or lose considerable value.
Anthony
I am a US citizen who has lived in the UK since 1983. My mother died in January and left her children money in a few life insurance funds. I have been sent beneficiary claim forms from these companies to fill out and they ask whether “I choose not to have federal, and state if applicable, income tax withheld from my payments” or whether “I choose to hCW 10% federal, and state where required, income tax withheld from the taxable portion of my payments”.
I don’t know what the legal tax requirement is for a US citizen living in the UK receiving inheritance money from the US. I make no income in the US. Could you please advise me as to my legal situation with regard to withholding 10% income tax or not and therefore what course I should take in filling out these forms?
Many thanks,
Sally
Hi Sally
Thanks for you message – as with many things it can be complex situation.
I’ll drop you an email, feel free to contact me directly on anthony@fusionpartners.co.uk
Kind regards
Anthony
My grannie has owned one building in North West London for over 20 years, and so, she has been trapped by the London housing bubble and a potentially huge IHT bill.
Those are the facts we are dealing with:
– The property is a terraced house, divided into TWO properties, one in the basement, and another in the upper floors.
– My grandmother lives in the basement floor. It has been her main residence since she moved in with her late husband. She owns the freehold.
– The upper floor is now occupied by my brother, rent free.
– Several estate agencies have evaluated the property, and said that the “asking price” for sale will be around 1.450.000 pounds…. BUT
– The property is in bad shape and a Chartered Surveyor has told us that there is “possible subsidence” and “possible wet rafters”, among many other small problems, so I believe that in case of a valuation for transfer or IHT purposes , the final amount will be much less, around a million or so.
– My mother is the only inheritor, as there are no other siblings.
The plan is for my grandmother to transfer her dwelling to my mother, as a potentially exempt transfer. As my grandmother will be giving her main residence to her only child, there will be no CGT, nor Stamp Duty to pay. Is it true? As we understand, this step won’t cost any money on taxes but some paperwork and legal expenses. Are we wrong?
My mother (who lives in Spain) will then reform the basement and rent the apartment. Will She be obliged to declare that property to the Spanish authorities for tax purposes?
We know that the rent´s Income Tax will only be paid to the HMRC, but are clueless about the property.
Meanwhile, my grandmother will move to the upper floor, which will be declared as her main dwelling. If everything goes fine, the next movement will be to transfer the upper apartment again after 7 years or before if the valuation we get about the TWO houses goes below the Nil Rate Band allowance.
As we believe, we have an Ace in the Nil Rate Band allowance my grandmother estate is entitled, even if she passes away before the notorious 7 years are over.
We assume that the Nil Rate Band in her case of will be of at least 325.000 + 125.000 pounds, but we can also add up my grandfather`s allowance , who passed away in 2004 and who left all of his estate (the house) to his wife. So another 450.000 might be added up, to a very nice amount of 900.000 pounds. Is that so?
Sorry for the very long introduction, but the final questions are far more concise. Do you think this is feasible, or just and elaborate and wishful fantasy? If It is possible, how much do you think it will cost in taxes, paperwork and legal counsel?
Seven years ago, I gave my son one third of my home to provide him with accommodation and to mitigate IHT. On my death, in what circumstances if any will HMRC honour the gift for IHT purposes and exclude its value from my estate? Alternatively, what would be the tax implications if I chose to live elsewhere and chose to sell the remaining two-thirds of my home to my son at a price advantageous to him? Apart from receiving your reply by mail, I would welcome a face-to-face discussion of the matter with and IHT expert.