Inheritance Tax Advice from our award winning money experts.
"In this World nothing can be said to be certain, except death and taxes". Benjamin Franklin 1789.
- Inheritance Gifts
- Inheritance Tax Threshold Rates 2015
- About Inheritance Tax
- Inheritance Trusts
- Reduce Inheritance Tax
- How Much Money Can I Gift Someone
- Bigger Discounted Gift Trust Discounts
Fact: Inheritance Tax is a legally avoidable tax. With our advice, your tax could be zero.
Inheritance Tax Advice- The 40% Death Tax (and Life Tax): HMRC may take up to 40% of your wealth in inheritance tax when you die. You even pay inheritance tax when you are alive.
Living overseas? You may still pay UK Inheritance Tax if domiciled or resident or have assets in the UK.
No 'rich man' tax: Inheritance Tax is no longer a wealthy tax, it affects us all. Do you really want the HMRC to take 40%? Who do you love more? The government or your family?
1. Inheritance Tax Advice - Helping With IHT
Do you need some help with your inheritance tax advice? Let our award winning inheritance tax advisers help you.
- Reduce Inheritance Tax with our Inheritance Tax Advice
- Protect Assets with legal Inheritance Tax Advice
- Make the Inheritance Tax bill nil with our expert Inheritance Tax Advisers
- Retain access to income and assets but still save Inheritance Tax
- UK National/Resident Inheritance Tax Advice
- Overseas Inheritance Tax Advice if you live overseas
- Non-Domicile Inheritance Tax Advice for foreign nationals in UK
Do not wait - get some inheritance tax advice right now, you have nothing to lose
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We are also highly qualified Chartered Financial Planners and have special taxation qualifications meaning that you will receive the highest quality advice in plain English. We even teach other advisers in our industry the financial planning examinations. We like to think we know more about tax and taxation than most.
Inheritance advice from the experts, helping you understand IHT for more assistance contact us.
Domicile Rules and Inheritance Tax
What is Non Domicile or Domicile?
Domicile is a legal term peculiar to English law. As many countries have adopted and copied the English Common Law system, many also have 'domicile' laws.
Think of domicile as your natural and permanent home. The place where you plan to be buried. The place where you plan to return to if you move overseas.
If you are domiciled or deemed domicile in the United Kingdom, your estate is subject to UK inheritance tax on worldwide assets.
You can live in Spain for thirty years and own a house there, but if you were born in the UK and you keep a bank account or retain a small property in the UK, i.e. it can be clearly seen that you may intend to return to the UK to live, you are subject to UK Inheritance tax rules on death on worldwide assets.
Domicile at Birth - your Domicile of Origin
In England and Wales, you acquire your domicile from your father's domicile, although if you are illegitimate you take your mother's domicile. In Scotland, your domicile of origin is where you spend your childhood years living.
Marriage before 1974: a wife who married before January 1974 automatically takes her husband's domicile.
Inheritance Tax for UK Domiciles
- If you are domiciled in UK, you are subject to inheritance tax IHT on worldwide assets.
- If you are domiciled outside UK, you are subject to inheritance tax IHT only on property in the UK.
- If you have moved to the UK from overseas and if you have been in the UK for at least 17 out of 20 previous years. You are deemed domicile UK and subject to inheritance tax IHT on worldwide assets.
- If you are UK domiciled and emigrate away from the UK and are not resident in the UK for tax purposes in given tax years, you are treated as UK domicile for at least 3 years after having left, you may then assume a Domicile of Choice, assuming certain basic intentions and commitments can be clearly proven.
What if I move overseas, can I change my domicile? Acquire a Domicile of Choice
Giving House to the Children Tax
Care fees funding is much in the news at the moment with cross party negotiation taking place on the best way to fund care in later life.
The current position in England and Wales is that if you are worth more than £23,250 (including your home), you will be required to pay for your own social care. Nursing i.e. NHS medical care is paid for by the NHS. In short, you get your medicine but your board and lodgings you pay for yourself. This means that many people have been forced to sell their own home to pay for their care. There is of course public outcry in that people have worked hard all their lives and then lose all their wealth if they need care.
Andrew Dilnot’s Commission on Funding of Care and Support report into care funding for the future suggested that a voluntary one off lump sum could be paid of say £35,000 and all your care in older age would be taken care of. In addition, suggestions have been made that the level that we are means tested for care be raised from £23,250 in assets to around £100,000. This would mean that some, but not many would fall outside the care fees means test. The estimated cost to the taxpayer for all this would be around £2bn per year.
I’ll Give My Money Away - Deprivation
Many people take action to protect their money by spending it or giving it away. This may work but it may also be deemed as a deliberate deprivation of assets if you give money away when you already have an illness that may lead to the need for care. The only sure fire way to give money or assets away is to do this when you are younger and healthy by using bonds and trusts. But what about your home?
Gifting Your Home to Children
There are a number of problems with giving your home away:
- Gift with Reservation: You probably will still want to live in your home. This may then become a “gift with reservation” for inheritance Tax. In short, on the day you die, HMRC may claim that you never really gave your house away so it will form part of your estate.
- Income Tax on Rent: You may wish to consider paying a rent to your children so it is not a “gift with reservation”, as they are now your landlord. This may mean they have an income tax liability on the rent as well as capital gains tax to pay when they eventually sell the home as it is now an investment property for them.
- Divorcing Children: What if your children, who now own your home, divorce? Your home, now their asset, will be part of any financial negotiations on divorce.
- Pre-Owned Asset Tax (POAT): If you gift your home instead to say to a family trust for the children but to also protect it from them divorcing or you paying no rent to avoid income tax, then HMRC has yet another way to tax you. Pre-Owned Asset Tax: You are taxed as having a benefit in kind, just like a company car. The taxable benefit is that you live in a property that you gave away, do not pay rent for but you still get a benefit from it i.e. live in it rent free.
How is POAT calculated?
The deemed annual benefit is the value of the home on a prescribed date multiplied by a rate of interest set by HMRC. However, if the benefit is under the deemed benefit annual limit, currently £5,000, it is not taxed.
Example 1 - House that you gifted into trust valued £150,000 on 6 April 2011:
- £150,000 X 4% (HMRC valuation rate April 2011) = £6,000.
- Result: Above Annual Limit: Whole deemed benefit of £6,000 is taxable under POAT.
- £6,000 is treated added to your salary or pension income and taxed as income
Example 2 - House that you gifted into trust valued £120,000 on 6 April 2011:
- £120,000 X 4% (HMRC valuation rate April 2011) = £4,800.
- Result: Below Annual Limit: POAT charge is not payable.
Professional Care and Estate Planning
Even in these few lines, we hope we have highlighted the pitfalls in something as simple as giving your home or a valuable painting or a vintage car to your children when estate planning. Asset protection really does need the help of a professional financial adviser.
Contact us about advice on giving the house to the children.