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All hell will break loose if the Government bring in an inheritance tax but one can bet it’s in the pipeline...
It’s as if it has been decided nobody has the right to own any property with the exception of the crooks who make the rules and their ‘besties’ in the know who cover up for them...
Inheritance tax shocker: Some families will pay 80pc
4 December 2016
Sarah Broadent
http://www.telegraph.co.uk/tax/inheritance/inheritance-tax-shocker-families-will-pay-80pc/
Despite Government claims that family homes will be passed on free of inheritance tax from April, some children and grandchildren will find they are left with an 80pc tax bill.
Former Chancellor George Osborne unveiled the new “residence nil rate band” which is given in addition to the usual inheritance tax allowance of £325,000 per person.
From April 2017 each person will have an extra £100,000 allowance to add to the £325,000. This is set to gradually rise until the residence allowance reaches £175,000 in 2020/21, giving a total IHT-free limit of £1m for a couple.
However, warns Alistair Cunningham, a director at Wingate Financial Planning, the residence allowance is tapered, and reduces, for estates worth over £2m.
This means an estate of £2.2m has no residence allowance at all. So, beneficiaries will pay the 40pc inheritance tax charge on £1.55m - which equates to £620,000.
A £2m estate, however, will benefit from the full £200,000 allowance - if the property had two original owners - this leaves just £1.15m liable to inheritance tax, a bill of £460,000.
Overall, this is an effective tax rate of 80pc.
The difference will become even more pronounced over time as the residence allowance rises but the threshold remains fixed at £2m.
- Reader Service: Telegraph Inheritance Tax Service, financial advice to reduce or eliminate your liability
Mr Cunningham said: “The apparent reduction to inheritance tax will apply to remarkably few people.
“Those who wish to benefit from the new rules should seek to use any IHT-exempt assets efficiently,and not to ensure lump sum death benefits from life assurance policies, pensions and employer schemes do not fall into their estates.”
To complicate matters further, some assets that themselves are IHT-exempt - such as property that qualifies for business property relief and agricultural land - will count towards the residence allowance.
Mr Cunningham said families potentially affected should consider setting up a trust on the first death to negate the impact of the changes.