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Inheritance Tax Presentation
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- 2. Inheritance Tax Theneed for IHT planning A quick recap on the main rules Loopholes, scams and dodges Civil Partnership Act 2004 Questions
- 3. The need forIHT Planning 9.4 million people wanting to leave assets to family and friends have not considered IHT planning. Brewin Dolphin’s National Inheritance Survey – March 2005
- 4. The need forIHT Planning £3.4 billion – projected tax take in 2005/06 Average IHT bill this year? National Audit Office Report on IHT – 12/2004 Estimated 2.4 million homes in UK valued at over current NRB It’s here to stay!
- 5. The need forIHT Planning Has been described as “a voluntary tax”, as many exemptions, reliefs and solutions available Taxman relies on people’s reluctance to plan “ mistrust their relatives more than they mistrust the Inland Revenue” syndrome The nature of the subject matter!
- 6. The need forIHT Planning Inland Revenue is getting tougher “ MPs urge to curb avoidance of inheritance tax” – Financial Times 12 July 2005 In 2003/04 3,600 compliance enquiries resulted in additional tax yield of £126 m IRS in USA measure IHT “tax gap” Inland Revenue are drawing on IRS experience Need for Quality Advice is greater than ever
- 7. A quick recapon the main rules IHT applies to total value of an estate on death (and on certain lifetime gifts) Worldwide assets of UK domiciled individuals Nil Rate Band - £275,000 (2005/06 tax yr) Bigger the estate bigger the tax bill! Spouse Exemption
- 8. Main Exemptions -Gifting Exempt Annual Exemption - £3,000 pa (c/f) Small Gifts - £250 pa Marriage Gifts – £5k, £2.5k, £1k Normal Expenditure out of income regular payments maintain standard of living Potentially Exempt Gifts to individuals Gifts to certain trusts
- 9. And now thebad news! Inheritance Tax has to be paid before probate is granted
- 10. Ways to saveIHT Effective and likely to remain effective Able to adapt to changing circumstances Tax efficient and affordable Ways to save IHT
- 11. First step –Make a Will No Will = Laws of Intestacy Will = Your Choice Jointly owned assets Joint tenancy – not included Tenancy-in-common – included
- 12. Inheritance Tax PlanningTax Efficiency Gift assets in life and on death to the children The Problem Primary concern is naturally for the spouse One Solution Nil Rate Band (NRB) Will trust
- 13. NRB Will TrustA trust which only comes into effect on death Allows spouse access to the fund Allows children and grandchildren to benefit At the discretion of the trustees Trustees usually include the spouse and adult children Potential saving of £140,000 IHT
- 14. NRB Will TrustNeed Assets to put into trust ISA/PEPs? Deposit Accounts? Unit Trusts/OEICs? Insurance Bonds? The property? Have to be sole ownership or held in Tenancy in Common.
- 15. A quick wordabout property Give house to children and pay them a commercial reviewable rent and live for 7 years
- 16. A quick wordabout property Tenancy-in-common Half the house left to children on first death Security for spouse Bankruptcy/divorce of children Sons/daughters-in-law Only own half the house and forced sale could mean becoming homeless
- 17. Maybe a betteroption Legal Charge Route House held in tenancy-in-common and NRB Will Trust set up without specification of assets. Will Trust has a clause in it which empowers trustees to accept an I.O.U from surviving spouse (i.e.: a charge over the property) rather than cash in satisfaction of the legacy. Personal reps impose a charge in favour of the trustees prior to handing over to surviving spouse. Care needed to avoid Stamp Duty Land Tax and Interest in Possession in whole house
- 18. Summary of OptionsSpend it (on frivolous things) Give it away Absolutely or into Trust (Gift Trust) Lend it Loan Trust – all the growth is outside the estate Charities Discounted Gift Schemes Insure it Whole of life to pay IHT – in trust! Nil Rate Band planning
Editor's Notes
- #2 This presentation aims to recap on the key issues currently facing advisers in the Inheritance Tax marketplace by providing an update to our understanding of the current legislation, planning opportunities and key issues for clients. An alternative to tax planning is simply to pay the tax. Failing to plan means paying the tax. Deciding to do nothing means paying the tax.
- #3 This presentation aims to recap on the key issues currently facing advisers in the Inheritance Tax marketplace by providing an update to our understanding of the current legislation, planning opportunities and key issues for clients. An alternative to tax planning is simply to pay the tax. Failing to plan means paying the tax. Deciding to do nothing means paying the tax.
- #4 This presentation aims to recap on the key issues currently facing advisers in the Inheritance Tax marketplace by providing an update to our understanding of the current legislation, planning opportunities and key issues for clients. An alternative to tax planning is simply to pay the tax. Failing to plan means paying the tax. Deciding to do nothing means paying the tax.
- #5 This presentation aims to recap on the key issues currently facing advisers in the Inheritance Tax marketplace by providing an update to our understanding of the current legislation, planning opportunities and key issues for clients. An alternative to tax planning is simply to pay the tax. Failing to plan means paying the tax. Deciding to do nothing means paying the tax.
- #6 This presentation aims to recap on the key issues currently facing advisers in the Inheritance Tax marketplace by providing an update to our understanding of the current legislation, planning opportunities and key issues for clients. An alternative to tax planning is simply to pay the tax. Failing to plan means paying the tax. Deciding to do nothing means paying the tax.
- #7 This presentation aims to recap on the key issues currently facing advisers in the Inheritance Tax marketplace by providing an update to our understanding of the current legislation, planning opportunities and key issues for clients. An alternative to tax planning is simply to pay the tax. Failing to plan means paying the tax. Deciding to do nothing means paying the tax.
- #8 This presentation aims to recap on the key issues currently facing advisers in the Inheritance Tax marketplace by providing an update to our understanding of the current legislation, planning opportunities and key issues for clients. An alternative to tax planning is simply to pay the tax. Failing to plan means paying the tax. Deciding to do nothing means paying the tax.
- #9 This presentation aims to recap on the key issues currently facing advisers in the Inheritance Tax marketplace by providing an update to our understanding of the current legislation, planning opportunities and key issues for clients. An alternative to tax planning is simply to pay the tax. Failing to plan means paying the tax. Deciding to do nothing means paying the tax.
- #10 This presentation aims to recap on the key issues currently facing advisers in the Inheritance Tax marketplace by providing an update to our understanding of the current legislation, planning opportunities and key issues for clients. An alternative to tax planning is simply to pay the tax. Failing to plan means paying the tax. Deciding to do nothing means paying the tax.
- #11 This presentation aims to recap on the key issues currently facing advisers in the Inheritance Tax marketplace by providing an update to our understanding of the current legislation, planning opportunities and key issues for clients. An alternative to tax planning is simply to pay the tax. Failing to plan means paying the tax. Deciding to do nothing means paying the tax.
- #12 This presentation aims to recap on the key issues currently facing advisers in the Inheritance Tax marketplace by providing an update to our understanding of the current legislation, planning opportunities and key issues for clients. An alternative to tax planning is simply to pay the tax. Failing to plan means paying the tax. Deciding to do nothing means paying the tax.
- #13 This presentation aims to recap on the key issues currently facing advisers in the Inheritance Tax marketplace by providing an update to our understanding of the current legislation, planning opportunities and key issues for clients. An alternative to tax planning is simply to pay the tax. Failing to plan means paying the tax. Deciding to do nothing means paying the tax.
- #14 This presentation aims to recap on the key issues currently facing advisers in the Inheritance Tax marketplace by providing an update to our understanding of the current legislation, planning opportunities and key issues for clients. An alternative to tax planning is simply to pay the tax. Failing to plan means paying the tax. Deciding to do nothing means paying the tax.
- #15 This presentation aims to recap on the key issues currently facing advisers in the Inheritance Tax marketplace by providing an update to our understanding of the current legislation, planning opportunities and key issues for clients. An alternative to tax planning is simply to pay the tax. Failing to plan means paying the tax. Deciding to do nothing means paying the tax.
- #16 This presentation aims to recap on the key issues currently facing advisers in the Inheritance Tax marketplace by providing an update to our understanding of the current legislation, planning opportunities and key issues for clients. An alternative to tax planning is simply to pay the tax. Failing to plan means paying the tax. Deciding to do nothing means paying the tax.
- #17 This presentation aims to recap on the key issues currently facing advisers in the Inheritance Tax marketplace by providing an update to our understanding of the current legislation, planning opportunities and key issues for clients. An alternative to tax planning is simply to pay the tax. Failing to plan means paying the tax. Deciding to do nothing means paying the tax.
- #18 This presentation aims to recap on the key issues currently facing advisers in the Inheritance Tax marketplace by providing an update to our understanding of the current legislation, planning opportunities and key issues for clients. An alternative to tax planning is simply to pay the tax. Failing to plan means paying the tax. Deciding to do nothing means paying the tax.
- #19 This presentation aims to recap on the key issues currently facing advisers in the Inheritance Tax marketplace by providing an update to our understanding of the current legislation, planning opportunities and key issues for clients. An alternative to tax planning is simply to pay the tax. Failing to plan means paying the tax. Deciding to do nothing means paying the tax.