Inheritance Tax
Discussion
Friend's father recently passed away - she is going through the process of getting probate sorted, and wading through the paperwork that the HMRC department has sent her. However she really resents having to pay inheritance tax (wouldn't we all) on the estate over £275,000. Obviously it is up to her to declare the estate on the form...but what would happen if she accidently forget to mention a couple of investments... The total estate is only around £400,000, so the liability is 40% of £125,000 - which by my simple maths is £50,000 (which is a nice slug of cash)...whilst I am telling her that she should declare all, because HMRC are a cheeky bunch, she is of a mind to 'forget' a couple of investments...
How rigerous are HMRC on this type of thing? Have other Pistonheaders contemplated this? Of course She could get advice from a professional... however I can guess what they might say...
Thoughts appreciated..
How rigerous are HMRC on this type of thing? Have other Pistonheaders contemplated this? Of course She could get advice from a professional... however I can guess what they might say...
Thoughts appreciated..
IHT is to my mind the unfairest tax of them all - you pay tax on everything you earn in life - why should you have to pay it again when you're dead.
However, the law is the law. If she "forgets" to declare it, and the IR find out - not only will she have to pay it anyway but she could get a nasty fine to boot. Plus they will then go through the rest of her affairs with a fine toothcomb and make her wish she'd never been born. Own up - it's less grief in the long run.
However, the law is the law. If she "forgets" to declare it, and the IR find out - not only will she have to pay it anyway but she could get a nasty fine to boot. Plus they will then go through the rest of her affairs with a fine toothcomb and make her wish she'd never been born. Own up - it's less grief in the long run.
Stephanie Plum said:
IHT is to my mind the unfairest tax of them all - you pay tax on everything you earn in life - why should you have to pay it again when you're dead.
An emotive topic I realise, however my view is that
a) a lot of the asset value on which IHT is payable will not have been 'earnt'... benefiting from house price inflation is not 'earning' money
b) the individuals whose gain is reduced by IHT (the beneficiaries of the will) have not earnt any of their new wealth
c) if the government reduced IHT it would have to raise equivalent revenues elswhere.. potentially by increasing taxes that affect almost everyone (eg. income tax)... thus spreading the pain to people who do not have an impending windfall with which to finance it
Eric Mc said:
Does she WANT a criminal record?
Is their a solicitor involved? Under the Money Laundering Regulations, he would be legally obliged to report her if she understated the values.
Is their a solicitor involved? Under the Money Laundering Regulations, he would be legally obliged to report her if she understated the values.
Absolutely.
with the Revenue and they will make your life shit for decades to come. My father died earlier this year. Our lawyer is suggesting legal ways to reduce/eliminate our IHT bill. Can I suggest that paying for some professional advice and doing some legal tax mitigation might be the best way forward/ Failing to declare part of the estate can only lead to trouble. Whilst your pal may indeed get away with it...should there be an investigation - and sometimes there is - and it came out that something illegal had been done? The consequences could be very severe...
Eric Mc said:
Fine in principle but , up until fairly recently, IHT yielded a pathetically small amount of tax for the Exchequer. The galling thing about the current situation is that FAR, FAR more people are being sucked into IHT than was ever envisaged in the original legislation.
Surely the point is that the dependents of this extended group of people caught in the IHT net are actually no worse off.... they are just less better off.
Eric Mc said:
Although it might also mean that the asset that the deceased wished to pass on to his dfamily might have to be sold into the open market purely to settle the tax liability arising.
Indeed... but as there are often multiple beneficiaries to a will and most people prefer gifts of cash rather than illiquid assets, this is usually what happens anyway
That's irrelevant. In those circumstances that would be due to familial choice. Why should it become de facto compulsory because of the Chancellor's greed?
In many respects, I have no serious arguments against IHT except for the fact that it is now collecting taxes from people who were never intended to be caught when the legilation was introduced. Once any legislation (not just tax related) starts having unintended consequences, that legislation either needs to be written off the statute books or at least seriously revised.
In many respects, I have no serious arguments against IHT except for the fact that it is now collecting taxes from people who were never intended to be caught when the legilation was introduced. Once any legislation (not just tax related) starts having unintended consequences, that legislation either needs to be written off the statute books or at least seriously revised.
Eric Mc said:
That's irrelevant. In those circumstances that would be due to familial choice. Why should it become de facto compulsory because of the Chancellor's greed?
In many respects, I have no serious arguments against IHT except for the fact that it is now collecting taxes from people who were never intended to be caught when the legilation was introduced. Once any legislation (not just tax related) starts having unintended consequences, that legislation either needs to be written off the statute books or at least seriously revised.
In many respects, I have no serious arguments against IHT except for the fact that it is now collecting taxes from people who were never intended to be caught when the legilation was introduced. Once any legislation (not just tax related) starts having unintended consequences, that legislation either needs to be written off the statute books or at least seriously revised.
Erm... the intended consequence of IHT was to 'catch people' whose assets on death exceeded a pre-determined level... and that's exactly what it does.
Eric Mc said:
No, it was intended to catch people in the very, very high wealth brackets. Not run of the mill middle level earners - which is what is happening now.
But the the IHT threshold has not been lowered (it has in fact been continually raised), so the goalposts haven't been moved to catch more people... it's simply that more people now fall into what was once considered to be in your words the 'very very high wealth bracket' (thanks mainly to the pots of unearned dosh accumulated through house price inflation).
But it used to affect probably less than 1% of the population when it was introduced, those who would be considered very wealthy.
It now catches a awful lot of what most people would consier "ordinary people"; not the intention of tax at all.
This government is very good at leaving allowances at ow levels to catch increasingly more and more people each year.
It now catches a awful lot of what most people would consier "ordinary people"; not the intention of tax at all.
This government is very good at leaving allowances at ow levels to catch increasingly more and more people each year.
Smartie said:
This government is very good at leaving allowances at ow levels to catch increasingly more and more people each year.
T'aint just this government mate. P11ds used to be for "higher paid" employees, i.e. those earning over £8,500 per annum!
Edited by 2 sMoKiN bArReLs on Tuesday 17th October 20:50
2 sMoKiN bArReLs said:
Smartie said:
This government is very good at leaving allowances at ow levels to catch increasingly more and more people each year.
T'aint just this government mate. P11ds used to be for "higher paid" employees, i.e. those earning over £8,500 per annum!
Edited by 2 sMoKiN bArReLs on Tuesday 17th October 20:50
exactly my point! Capital Allowances on cars are only allowable up to a car costing £12,000 as spending any more than this would be just excessive!
bd02 said:
Stephanie Plum said:
IHT is to my mind the unfairest tax of them all - you pay tax on everything you earn in life - why should you have to pay it again when you're dead.
An emotive topic I realise, however my view is that
a) a lot of the asset value on which IHT is payable will not have been 'earnt'... benefiting from house price inflation is not 'earning' money
b) the individuals whose gain is reduced by IHT (the beneficiaries of the will) have not earnt any of their new wealth
c) if the government reduced IHT it would have to raise equivalent revenues elswhere.. potentially by increasing taxes that affect almost everyone (eg. income tax)... thus spreading the pain to people who do not have an impending windfall with which to finance it
Socialists
Hi,
Interesting subject and obviously I agree with Eric that if a professional is told about things like this they have to give you the correct advice. When they find out that you don’t follow it, they have to report you.
Stab
Stab, do you REALLY want that little snippet displayed on a public forum?
If you do I'll paste it back.
Interesting subject and obviously I agree with Eric that if a professional is told about things like this they have to give you the correct advice. When they find out that you don’t follow it, they have to report you.
Stab
Stab, do you REALLY want that little snippet displayed on a public forum?
If you do I'll paste it back.
Edited by Big Al. on Friday 20th October 13:08
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