Archive for the ‘Inheritance Tax’ Category
Tuesday, October 9th, 2007
The pre-Budget report to be made by chancellor of the exchequer this afternoon is expected to include big increases in thresholds for inheritance tax (IHT), it has been reported.
Alistair Darling will also address the issue of non-domiciled businessmen and private equity bosses who live abroad paying little in the way of taxes, according to the Scotsman.
Edinburgh South West’s MP will also state that Her Majesty’s Revenue and Customs will examine the way in which small family businesses disseminate profits among members of the family to avoid paying taxes, the newspaper states.
Increases in IHT boundaries and a crackdown on non domiciled individuals may be a response to shadow chancellor George Osborne’s pledge at the start of this month that a Conservative government would raise the threshold to £1 million, reports the publication.
The current threshold for IHT stands at £300,000 and in his last Budget as chancellor Gordon Brown advised that the it will rise to £350,000 by 2010.
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Monday, October 8th, 2007
As rumours that the prime minister may call for an election in November this week, there is a possibility that the chancellor of the exchequer may publish the pre-Budget report and spending review in the same period.
Edinburgh-based life insurance and pension company AEGON has stated that it is possible that a large increase on the inheritance tax (IHT) nil rate band from £300,000 may be announced – but leaving the home outside the tax net.
Other possibilities include a change in the period for which IHT can apply to gifts from the current period of seven years to a decade and a reduction in the amount of time it takes for a non-domiciliary to be deemed to be UK domiciled and become liable to the tax on their worldwide assets
A possible reduction in the nil rate band, paired with taking the home outside the IHT net may also take place, according to the company.
In his last Budget as chancellor, Gordon Brown suggested that the IHT nil rate boundary should be raised to £350,000 by 2010.
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Wednesday, October 3rd, 2007
Financial service provider James Hay yesterday commented on shadow chancellor George Osborne’s announcement that a Conservative government would raise the inheritance tax (IHT) threshold to £1 million from its current position at £300,000.
Liz Henderson of James Hay’s technical unit stated that the IHT, a tax which generates "relatively small" revenues for the government. is subject to "most debate" among consumers.
Ms Henderson stated that along with the abolition of stamp duty, such changes would be welcomed by homeowners – and cost the government some £3.5 billion, according to the Conservatives – but the ways of making up lost revenues would "cause more controversy than IHT itself".
Plans to implement a flat-rate offshore domicile levy on anyone registered as domiciled overseas for tax purposes are "unlikely to be as clear-cut" as they sound, Mr Henderson asserted.
Some individuals may have "considerable wealth overseas" while others will be reluctant to register as non-domicile due to the limited amount of tax savings they may benefit from, Ms Henderson concluded.
In his last budget as chancellor, Gordon Brown pledged to raise the IHT threshold to £350,000 by 2010.
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Wednesday, September 26th, 2007
A new drive by HM Revenue & Customs (HMRC) aims to clamp down on inheritance tax (IHT), it has been reported.
Financial information such as bank statements and pension plans are being examined by HMRC to ensure that gifts made during the seven years prior to the death of the benefactor are declared accurately, according to the Telegraph.
IHT is levied at a rate of 40 per cent on all assets above the boundary of £300,000 upon an individual’s death as well as gifts made by the party within the previous seven years, unless they fall within certain limits.
Those concerned over IHT may benefit from seeking legal advice in order to see how it may affect them and how its effects can be diminished.
HMRC issued a newsletter in August that stated from now until March 31st 2008, it would be paying "particularly close attention" to lifetime transfers.
In his last Budget as chancellor, prime minister Gordon Brown announced plans to raise the IHT limit to £350,000 by 2010.
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Tuesday, September 25th, 2007
While there are "many ways" to avoid paying inheritance tax (IHT), individuals "do need to take advice" on the matter, an independent financial advisor has asserted.
Keith Thomas, director of investment services at Blackadders, noted a number of ways in which consumers may reduce or eliminate the tax payments, including giving small unlimited gifts of up to £250 per tax year and adjusting wills.
He noted that IHT is a "very emotive" tax and that many consumers believe that it is not going to affect them.
"Providing individuals take advice and gift within the confines of the existing legislation there is no need not be a problem," he added.
IHT is a tax charged at 40 per cent on the estate of a deceased individual which is valued above a threshold of £300,000.
In his last Budget as chancellor of the exchequer, Gordon Brown announced plans to increase the IHT boundary to £350,000 by 2010.
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Wednesday, September 19th, 2007
A simple way to avoid inheritance tax (IHT) is to donate gifts to registered charities, according to Standard Life Assurance.
Estate planning specialist at the firm Julie Hutchison told the Scotsman that there is a 100 per cent exemption for both lifetime gifts – and those left in a will – made to registered charitable organisations, adding that cash is not the only kind of donation that can be contributed.
"Gifts of shares can also qualify under the so-called Share Aid rules, as can certain gifts of land under the Land Aid rules. There are also income tax and capital gains tax benefits to making donations to charity," she said.
The publication states that families were taxed £1.5 billion in avoidable IHT payments in 2006 – a 19 per cent increase from 2005.
IHT is payable at 40 per cent on the estate of a deceased person that exceeds £300,000. In his last Budget as chancellor of the exchequer, Gordon Brown stated that the threshold would be raised to £350,000 by 2010.
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Wednesday, September 12th, 2007
Elderly people wishing to simultaneously aid their family financially and reduce their inheritance tax (IHT) should consider giving gifts via a trust, it has been suggested.
By making gifts to children through a gift plan trust, any growth on the investment in the fund is immediately outside the estate of the grandparent and a full IHT saving can be made if the grandparent survives the giving of the gift by seven years, according to Standard Life.
Estate Planning Specialist for Standard Life Assurance commented that it is not always feasible for grandparents to pass on capital while they are alive as they need to maintain a reasonable standard of living, thus it is only upon death that money is gifted and as such is subject to IHT.
Currently, IHT at 40 per cent is payable on the value of a deceased person’s estate that exceeds £300,000.
Prime minister Gordon Brown announced plans to increase the IHT threshold to £350,000 by 2010 in his last Budget as chancellor of the exchequer.
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Tuesday, September 11th, 2007
Two sisters who have claimed that the law treats them less advantageously than if they were a lesbian couple will take their challenge of Britain’s laws regarding inheritance tax (IHT) to the European court of human rights, it has been reported.
Joyce and Sybil Burden – both in their eighties – believe that their joint-owned home will have to be sold to cover IHT tax costs upon the death of the first sister. They will plead their case in front of 17 judges in Strasbourg.
IHT laws will likely result in both their estates being taxed upon their deaths, a situation that does not occur for those couples in civil partnerships or marriages, reports the Guardian.
The sisters argue that they should be treated as civil partners as they have lived together their entire lives.
An amendment to the civil partnership bill to extend benefits to family members over the age of 30 who had lived together for at least 12 years passed in the House of Lords was overturned in the Commons.
Civil partnerships have been legal in Scotland since December 5th 2005.
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Friday, September 7th, 2007
The Telegraph has advised the government to look across the channel when considering reforms to inheritance tax (IHT).
According to the newspaper, France has experienced a property boom similar to the UK, meaning that more and more properties fall under French IHT thresholds.
However, French president Nicolas Sarkozy has increased the allowance on a main residence by 30 per cent, bringing significant change in the way wealth tax is calculated to the benefit of the owner.
Such a move was praised by the Telegraph and the paper has called for prime minister Gordon Brown to implement a similar policy.
Whether Mr Brown will take immediate notice of the Telegraph’s appeal remains to be seen but in the meantime there is expert advice on hand from solicitors to help consumers reduce their inheritance tax bill.
Making a will is crucial in avoiding IHT as it will ensure an individual’s assets go where they are intended to go and any estate planning done is effective.
There are also a series of IHT exemptions that a legal specialist can help in explaining, including the use of gifts and allowances that would not be liable under the tax.
The current IHT threshold stands at £300,000, above which level all estates are taxed at a rate of 40 per cent.
In his last Budget as chancellor, Mr Brown committed to raising the threshold to £350,000 by 2010.
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Wednesday, August 29th, 2007
Scottish succession law may be overhauled to better suit recent societal developments such as climbing rates of divorce, the rise in families with step children and civil partnerships, it has been revealed.
The Scottish Law Commission published its paper on reform earlier this month. It focused on the protection of close relatives from disinheritance and the legal position of surviving spouses, civil partners and cohabitants in the case of someone dying without having made a will.
There has not been a major revision of Scots law in this area since the Succession Act in 1964 apart from the Scottish Family Law Act in 2006 that allows cohabitants to apply for a discretionary award should a cohabitant die without making a will.
Estate planning specialist at Standard Life Julie Hutchinson told the Scotsman: "Given the change in the law in 2006, it is an opportune moment to review this whole area of succession rights and consider the most prudent way forward".
Ms Hutchinson also noted that Scots law in this area is particularly complex.
Civil partnerships have been legal in Scotland since December 2005.
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