Inheritance Tax Evasion
Inheritance Tax Evasion
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Discussion

Seight_Returns

Original Poster:

1,640 posts

231 months

Monday 1st September 2008
quotequote all
It must be very tempting to evade Inheritance Tax by transfering assets in the form of cash, gold or some other untraceable asset to family members or other recipients.

Must happen a lot. What's to stop this in practice ?




Justayellowbadge

37,057 posts

272 months

Monday 1st September 2008
quotequote all
Seight_Returns said:
It must be very tempting to evade Inheritance Tax by transfering assets in the form of cash, gold or some other untraceable asset to family members or other recipients.

Must happen a lot. What's to stop this in practice ?
The correct term is Estate Planning and it does happen a lot. If you leave a penny to the revenue you have failed.

bazking69

8,620 posts

220 months

Monday 1st September 2008
quotequote all
Lots of people do it, and rightly so. Why should you be stung for a death tax on savings you have worked your life for and already paid tax on?
I guess it works on trust and depends how close your family is...

Fittster

20,120 posts

243 months

Monday 1st September 2008
quotequote all
bazking69 said:
Why should you be stung for a death tax on savings you have worked your life for and already paid tax on?
Because most people who vote want a large welfare state and it must be paid for somehow. Would you prefer and increase in income tax?

off_again

13,917 posts

264 months

Monday 1st September 2008
quotequote all
Yeah, don't resort to illegal methods to avoid IHT. There are more than plenty of people and companies who will help you plan for and understand the process and methods to do this - all perfectly legal and above board. There is no problem, but posting on the Internet about how you will evade it, possibly isnt the smartest thing to do.....

Google can be your friend as well as your enemy... smile

deckster

9,631 posts

285 months

Monday 1st September 2008
quotequote all
Seight_Returns said:
It must be very tempting to evade Inheritance Tax by transfering assets in the form of cash, gold or some other untraceable asset to family members or other recipients.

Must happen a lot. What's to stop this in practice ?
What makes you think that cash or gold are in the slightest bit untraceable? Unless it has been sitting under your bed for the last 20 years, it is generally pretty hard to conceal a large sum of money vanishing from your assets.

It probably happens less than you think - at least, happens successfully less than you think. The tax man will quite literally have seen everything and the chances of you coming with a genuinely new IHT-busting wheeze are exceedingly small.

Jinx

12,022 posts

290 months

Monday 1st September 2008
quotequote all
Hopefully our resident tax expert will be along in a minute but I think the seven year rule will apply (if you die within seven years of the assets being transferred then IHT is applicable) .

Edited by Jinx on Monday 1st September 14:55

davido140

9,617 posts

256 months

Monday 1st September 2008
quotequote all
The buying and selling of woodland as a method to avoid inheritance tax has been around for donkeys years and AFAIK is as popular as ever! AFAIK a piece of woodland that is inherited attracts no tax and can be sold tax free too, seems a nice easy "dodge" and there are plenty of agents out there to help. I looked at is a while ago but you'd be surprised as how expensive a couple of acres with a few trees can be! probably because of this exact practise!


bobt

1,323 posts

233 months

Monday 1st September 2008
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My mum has taken up gambling and other expensive hobbies in her eighties winkAs I am no longer a UK tax resident I hope she spends it all before the grim reaper comes knocking on her door.

crofty1984

17,064 posts

234 months

Monday 1st September 2008
quotequote all
If I'm right, you can transfer your house into your kids names 7 years before you pass up the breathing game.
If you have 2 kids best to give each 40% each, that way if one of them turns out to be a right c**t the remaining 20 and 40 mean they don't get a say. The remaining 20% should be less than the tax threshold. Unless you have a massive house.

V8mate

45,899 posts

219 months

Monday 1st September 2008
quotequote all
deckster said:
Seight_Returns said:
It must be very tempting to evade Inheritance Tax by transfering assets in the form of cash, gold or some other untraceable asset to family members or other recipients.

Must happen a lot. What's to stop this in practice ?
What makes you think that cash or gold are in the slightest bit untraceable? Unless it has been sitting under your bed for the last 20 years, it is generally pretty hard to conceal a large sum of money vanishing from your assets.

It probably happens less than you think - at least, happens successfully less than you think. The tax man will quite literally have seen everything and the chances of you coming with a genuinely new IHT-busting wheeze are exceedingly small.
Start planning at 40. Pop out and buy a Krugerrand or two in your lunch hour once a month. Then, as you get older, start a collection of silver candlesticks. As soon as you 'pop off', have the kids ready to clear out these few 'personal trinkets'.

This, of course, only works if your children aren't complete 4rses.

Justayellowbadge

37,057 posts

272 months

Monday 1st September 2008
quotequote all
crofty1984 said:
If I'm right, you can transfer your house into your kids names 7 years before you pass up the breathing game.
If you have 2 kids best to give each 40% each, that way if one of them turns out to be a right c**t the remaining 20 and 40 mean they don't get a say. The remaining 20% should be less than the tax threshold. Unless you have a massive house.
You'll have to pay a pro-rata market rate of rent for the share you no longer own, which the kids will have to pay tax on, IIRC.

Welshbeef

49,633 posts

228 months

Monday 1st September 2008
quotequote all
Just to give you all some advice here.

You can gift any amount of cash/assets/anything and provided you live 7 years after the gift then its tax free. Or say you die 5 years into the 7 then IIRC it will be about 15-20% of what they gave you which needs to be considered within their estate and taxed accordingly.

One thing is with property you cannot gift them your own residence and then carry on living there the only way to do that is that they would have to pay you rent.

Or if you are that well off there are plenty of countries which have zero inheritance tax zero capital gains tax. I used to know one chap who owned 5 Properties in london and he wanted to sell them but the gain he bought pre 1999 was huge and he didnt want to move into one at a time live there for 6 months claim its your primary residance and then sell it capital gains tax free he needed the whole lot sold in a short period of time. SO he quit his £50k a year job and moved to Belgium (I think it was belgium but there are many other places with zero capital gains tax) and got citizenship there he rented a small flat and then sold the lot - note his tax bill would have been £300k+ so his loss of £50k salary + rental for one year clearly pointed out it was more beneficial to do it that way.

Following 15 months he was back in the UK and got back into a job of similar wage.

Plenty of totally legal ways of doing it.

I wonder if you could do the following - set up a gambling company and get a licence all legal then have 1 game of black jack and say your son is the only player allowed in he gambles and wipes out the house the cash you have put into the company is suddenly all gone. You decide to call it time and thats that. Your son has won money gambling which is tax free can do what he likes tax free....

hmm I wonder?

Jinx

12,022 posts

290 months

Monday 1st September 2008
quotequote all
Welshbeef said:
lots of stuff
I like the death bed casino idea scratchchin

GreatGranny

9,519 posts

256 months

Monday 1st September 2008
quotequote all
Welshbeef said:
You can gift any amount of cash/assets/anything and provided you live 7 years after the gift then its tax free. Or say you die 5 years into the 7 then IIRC it will be about 15-20% of what they gave you which needs to be considered within their estate and taxed accordingly.

One thing is with property you cannot gift them your own residence and then carry on living there the only way to do that is that they would have to pay you rent.
Does it have to be maarket rate for rent?

Whats to stop my M + D gifting their house to me, paying me market rent per month but me giving them the exact amount to them as a gift every month or eqivalent per week?

Vesuvius 996

35,829 posts

301 months

Monday 1st September 2008
quotequote all
Jinx said:
Welshbeef said:
lots of stuff
I like the death bed casino idea scratchchin
Sounds like a game show hosted by Brucie.

"Nice to see you, to see you nice. Welcome ladies and jennelman to Deathbed Casino....."


quyen

592 posts

224 months

Monday 1st September 2008
quotequote all
davido140 said:
The buying and selling of woodland as a method to avoid inheritance tax has been around for donkeys years and AFAIK is as popular as ever! AFAIK a piece of woodland that is inherited attracts no tax and can be sold tax free too
Just checked on google and apparently the trees and timbers can be sold free of CGT but not the land. So if you inherit the land, does that mean you'll be liable for 40% of the land value when you sell it?

quyen

592 posts

224 months

Monday 1st September 2008
quotequote all
GreatGranny said:
Does it have to be maarket rate for rent?

Whats to stop my M + D gifting their house to me, paying me market rent per month but me giving them the exact amount to them as a gift every month or eqivalent per week?
You still have to pay tax on the rent you receive regardless of whether you gift it back to your parents or not. However, you can gift it to charity tax-free but I doubt if your M + D would qualify!

AMCDan

2,855 posts

238 months

Monday 1st September 2008
quotequote all
my dad moved to the Isle of Man.

HTH

Welshbeef

49,633 posts

228 months

Monday 1st September 2008
quotequote all

[/quote]

Does it have to be maarket rate for rent?

Whats to stop my M + D gifting their house to me, paying me market rent per month but me giving them the exact amount to them as a gift every month or eqivalent per week?
[/quote]

Yes it does.

Well if you gifted the rent back to them firstly your liable for tax on income you have earnt from them in rent (doesnt matter what you do with it after you have received the rent its income you have received). They will have the income from you but records will need to be kept so that provided you live for 7 years they will not be taxed upon income they have received which is still part of your estate.