Comments for Taxfile

Comment on Something You Need to Know about Principal Private Residence Relief to Avoid CGT by Anonymous

Anonymous — Wed, 21 May 2008 08:55:00 +0000

I would like to query how you can change the election of principal private residence (PPR). You say that after making an election, you may change this at a later date. I have looked at leaflet IR283 on the HMRC web site, and this states:

“You can nominate which residence is to be treated as your main residence for any period. Your nomination must be made within two years of the date you first have a particular combination of residences. If there is a change in your combination of residences, a new two-year period begins.”

This implies (but doesn’t state) that you may only change the election when your combination of residences changes. Is there an HMRC leaflet that states that you may change the election at any time?

Comment on IHT: Transfer of unused nil-rate band by Adrian

Adrian — Thu, 14 Feb 2008 11:19:00 +0000

Although the chancellor has tinkered with Inheritance Tax he has not really given anything away that could not have been achieved with Inheritance Tax saving Wills prior to his budget.

It does mean that many people who had Nil Rate Band Inheritance Trust Wills written need to have them examined as they could be potentially be worse off by having them.

The way some of these Wills are written means that on first death from the couple the Nil Rate band is used to transfer money into the Nil Rate Band Trust. If the second partner from the couple dies some years later they may not benefit in the uplift of the nil rate band allowance.

This is quite complicated but if the first partner died in 2007 and the Nil Rate Band Trust was in acted then the second partner died in 2010 they total IHT free allowance could have been £700,000 but if the IHT Will transfers the nil rate band in force at the time of first death they would have used 100% of the nil rate band allowance and thus only achieve a total of £650,000, free of inheritance tax. The longer the period between the first partner dyeing and the second partners death the bigger this gap will get.

If you are married or in a civil partnership you should consider either updating your wills or writing wills to include an asset protection trust to help protect a portion of the estate from potential care cost assessment, if you should need to go in to longer term care after the death of the first partner from the couple. Where as inheritance tax could only be applied at 40% on assets over the £300,000 nil rate band if you need long term care the local authorities could drain all of your assets down to a value of £13,000 a much bigger threat.

Adrian
gb-legal.com

Comment on Welcome to the Inheritance Tax Blog by Anonymous

Anonymous — Wed, 06 Feb 2008 12:39:00 +0000

An important point to consider is tax planning within a will, particularly if the person making the will is married. We often advise married couples about the best way to use their spousal exemption in order to deal with inheritance tax in the most efficient way.

Comment on Welcome to the Inheritance Tax Blog by TaxPlanner

TaxPlanner — Sat, 19 Jan 2008 19:47:00 +0000

After the Chancellors pre budget speech in October the IHT rules for married couples and civil partnerships has changed and the effectiveness of IHT wills is somewhat reduced. In some cases having an IHT could make a married couple or couple in a civil partnership worst off.

Trust will still can play a part in inheritance tax planning and also in helping protect some of the family’s assets from potential care cost assessment if one of the spouses outlives the other and then requires long term care.

Asset Protection trusts, Interest in Possession Trusts and Revokeable Lifetime Interest Trust could all have a role to play and should be consider. A good will writer should take the time to understand what is required and the discuss all the potential solutions.