Inheritance tax

if over the IH allowance [currently £325k] and gifted with the last 7 years then the estate is still subject to inheritance tax on a sliding scale

come to the C.I.  NO SUCH TAX HERE ...

delta i dont understand, if every penny has been given away,. lets say 800k, and that money has been spent already on various things by the recipitants before the person has died? any tax reprecussions?

Yes if given away & you die within seven years the recipients would have to pay Inheritance Tax on the " gift " see chart for percentage of  taper relief from the 40% tax that should be paid.

http://community.betfair.com/chit_chat/go/thread/view/94038/29949701/inherit...

yes

as above

if a couple [married] and the first deceased has no allowance used - 2nd death can utilise the unused element - ie £650k [325 x 2]

what's the best way to give a significant amount to someone with no risk of paying the tax should you die within the 7 years or if unexpected how can you minimise the payments on death?

what's the best way to give a significant amount to someone with no risk of paying the tax should you die within the 7 years or if unexpected how can you minimise the payments on death?

The 'no risk' qualification is not possible - every asset has a risk.

Leaving that caveat aside, options for mere mortals might be;

Transfer assets over the IHT limit into 'Managed Woodland'; 'Working Farm'; 'AIM Shares'; Use the annual exemption limit on gifts; give away any unspent annual income.

There are also options with 'Trusts', but these are expensive to set up, need to be closely managed as the legislation is a 'shifting sand' and may be retrospective with the possibilities of 'annulment'.

Yes if given away & you die within seven years the recipients would have to pay Inheritance Tax on the " gift " see chart for percentage of  taper relief from the 40% tax that should be paid.

No, the tax burden falls on the estate.

.......... only if there was not enough residue in the estate would the recipient be pursued for the tax.

......... as better explained here.

The seven-year rule - 'potentially exempt transfers'

Any gifts you make to individuals will be exempt from Inheritance Tax as long as you live for seven years after making the gift. These sorts of gifts are known as 'Potentially Exempt Transfers' (PETs).

However if you give an asset away at any time, but keep an interest in it - for example you give your house away but continue to live in it rent-free - this gift will not be a potentially exempt transfer. Follow the link below to find out more.

If you die within seven years and the total value of gifts you made is less than the Inheritance Tax threshold, then the value of the gifts is added to your estate and any tax due is paid out of the estate.

However, if you die within seven years of making a gift and the gift is valued at more than the Inheritance Tax threshold, Inheritance Tax will need to be paid on its value, either by the person receiving the gift or by the representatives of the estate.

If you die between three and seven years after making a gift, and the total value of gifts that you made is over the threshold, any Inheritance Tax due on the gift is reduced on a sliding scale. This is known as 'Taper Relief'.

From here: http://www.hmrc.gov.uk/inheritancetax/pass-money-property/exempt-gifts.htm

What if you simply bought your wifes car or businee for a million pounds and put it all down in writing? a business deal? obviously overpaying but still?

or bought things from all those you planned to give money too, and overpayed on everything,

still deemed as a gift for IHT purposes.

if you bought an asset that qualified for business property relief it would be exempt after 2 years.

what if the transaction was made abroad when inheritance tax laws if any are different?

could you buy something such as a piece of art, and sell it to someone for a nominal fee?

Makes no difference.

why would a business transaction be subjected to inheritance tax - it makes no sense - surely this cant be right?

OR why would a normal deal, be subjected to inheritance tax, so like when you buy something or sell something on ebay - you dont pay inheritance tax - the person who bid the highest pays that amount, so you simply overpay and bid the highest amount

what if the transaction was made abroad when inheritance tax laws if any are different?

No, that won't work unless the donor is no longer a resident in the UK.  So take up residency in Isle of Man, CI or NZ maybe.  List here:

http://en.wikipedia.org/wiki/Inheritance_tax

"why would a business transaction be subjected to inheritance tax - it makes no sense - surely this cant be right?

OR why would a normal deal, be subjected to inheritance tax, so like when you buy something or sell something on ebay - you dont pay inheritance tax - the person who bid the highest pays that amount, so you simply overpay and bid the highest amount"


That will work if you want to give all your money to a total stranger.

Im happy to help if you wish to pursue this option

could two uk redsidents transfer cash between swiss bank accounts?

so you temporarily take up residence in another country and then make a payment, and then simply move back? sounds ok to me

dotchinite - if you wanted to give a million to a loved one before you died, to avoid the tax you could asked the love one to sell a car on ebay - and then pay a million, nobody else would bid that amount - thats what i meant

What if you simply bought your wifes car or businee for a million pounds and put it all down in writing? a business deal? obviously overpaying but still?

You can transfer assets between spouses to avoid IHT on the first death.  No need for any 'dodgy deals'.

"dotchinite - if you wanted to give a million to a loved one before you died, to avoid the tax you could asked the love one to sell a car on ebay - and then pay a million, nobody else would bid that amount - thats what i meant"

That wouldnt work.

why wouldnt it work? seems straightforward to me.

There are rules to prevent transfers between connected people.

Well not to prevent them happening but to ensure the values are accurate.

i wonder if thats law thhough

Of course it is.

yeah probably comes under money laundering, still can always move to the channel islands briefly

Dont think moving briefly works either.

im sure people are aware of any loop holes if need be, was just interested to know which

im not trying advocate tax avoidance - its just this tax is all shades of wrong imo, like window tax was

"im sure people are aware of any loop holes if need be, was just interested to know which"

Loophole is wrong word I think, its all about advanced tax planning that is within the law.

its a voluntary tax.

if you dont want your estate to pay it there are plenty of things you can do to mitigate it.

Bitcoins?

Naive question. But assuming there is no formal record kept by the deceased, who is responsible for tracking down any gifts made by the deceased, and how.

Easiest solution is to divorce your wife and split the estate, you then marry your oldest son and your now ex-wife marries the next oldest child on the understanding that if anyone dies the survivor marries the next in line.

Naive question. But assuming there is no formal record kept by the deceased, who is responsible for tracking down any gifts made by the deceased, and how.

It's the executors task to manage the estate.  They will often be close family members so will have knowledge of any 'arrangements'.  If the executors are Banks or Solicitors they will ask about any 'arrangements' that have been made.

It is very difficult to transfer assets without leaving an audit trail.  It is also difficult for any beneficiary of an 'arrangement' to conceal their good fortune ....... and there are plenty of 'jealous' non-benefactors ready to shop 'em.

if you gave a gift of say a million, and then spent most of it within a 4 or 5 years and the the person that gave it died, there  is no way inheritance tax can be taken as most of it would be gone,

obviously everybody hates to pay tax but i understand the point of it ect but i cannot agree with inheritence tax its a joke, if someone has worked all their life paying taxes on what they have earnt and then dies why should the government have any right to take a cut of the value on somebody elses personal possessions. I just cannot see how it can be justified or legal in any way.

mengmeng

Inheritance tax should be one of the least controversial of taxes and I just don't understand all the uproar.

We have to pay taxes several times whenever there is a transfer of good and services. We first pay income/NI taxes and still have to pay so many duties on top out of that after tax money and we pay VAT on everything and even on VAT the duty itself!!!

So you almost cannot provide any paid labour without having to pay taxes on that and I find that more objectionable.

IHT on the other hand is more morally defensible tax since it tends to apply to people who recently have been using the benefit of the state a bit more in the form of NHS care, pensions etc so it is fair to take from their estate a bit more and the beneficiaries have done no work to earn that money so should rightly pay tax on that income.

If you get a decent sum from an inheritance ,don't tell anyone ,otherwise you could face an on slaught of jealous from everyone around you.
" loose lips sink ships". Pay the tax but don't tell anyone how much you received. It's not worth going outside the law ,with all the stress of wandering if they'll claim it back ,which they could.

How does the estate get measured in the first place?

If aunt Fanny has box of jewellry, who is going to come into her house after her death, rummage in her house to find the box, evaluate its worth then tell the tax man

I'm guessing that boris doesn't have children ( i don't either ), but try to imagine that you do and that you've invested a lot in them and their children ( your grandchildren ) as well.

One of them has a business plan - do you want them to plead to a bank for a loan, or do you want to help them after you've gone.

It's an amazing world - if you want to see your grandkids get some help from you then the State can compulsorily take 36-40% first of everything over 325k. If you've got organs worth passing on, but you hate the State or simply don't care about the human race as a whole, then they and the people who might benefit from a transplant can feck off.

Imv, at the end of it all, taxes are set at levels the State thinks it can get away with - realpolitik.

Anything over about a million should be taken away wholesale, noone actually deserves that money.  But could be useful for schools, hospitals and trident nuclear submarines.  Trouble is the proper rich will just find a way round the rules either way so the argument is all epidemic anyway.

Bongo

You are right I have no kids but I do have parents though.

If you actually wanted to help your kids or grand kids you would do it during your life time and perhaps have joy in seeing them making a success of their lives.

If you love your children and trust them to do good with your money, just help them out while your alive otherwise they will have to share it out with the society that enabled you accumulate that wealth, Simples!!!

There is no moral reason for the state to tax us on wages we actually earn but not taxing us when we inherit out of other people's efforts!!!

bloody hell rob

do you wear Red all week long?

"Anything over about a million should be taken away wholesale, noone actually deserves that money.  But could be useful for schools, hospitals and trident nuclear submarines"

It would certainly be useful for that in an ideal world, but like all tax it will be spent on politicans' vanity projects, useless council workers, wars and benefits.  So imo, the govt can get stuffed.