A way round inheritance tax?
23 August 2006, 12:12 PM
#1
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A way round inheritance tax?
http://news.sky.com/skynews/article/...539291,00.html
So the parents who say own their house outright decide later in life to go down the road of doing an interest only mortgage for an amount to take the value of the property to below the £285k mark and avoid inheritance tax when it gets given to their son or daughter. They invest the money they get back from mortgaging the house in a product that pays out at least the same as what they are paying out for the mortgage each month so they are at the very least no worse off.
However when the property gets handed over and avoids inheritance tax what happens to the invested money from the mortgage? It can't get handed over along with the house as it will be liable for the inheritance tax so they leave their son or daughter with a mortgage headache. So whats the point?
How would you go about transferring the invested money seperately to the son/daughter so its not all lumped together in one estate with the house? Although I guess the answer to this is what you pay someone like Tiggs to tell you so i guess the more appropriate question is is it actually possible to transfer the house and the invested money seperately to avoid the tax?
BTW its not something that I need to know the answer to, more a case of was wondering what the appeal of the new mortage is mentioned in the article. I am assuming there must be a way round paying the inheritance tax?
So the parents who say own their house outright decide later in life to go down the road of doing an interest only mortgage for an amount to take the value of the property to below the £285k mark and avoid inheritance tax when it gets given to their son or daughter. They invest the money they get back from mortgaging the house in a product that pays out at least the same as what they are paying out for the mortgage each month so they are at the very least no worse off.
However when the property gets handed over and avoids inheritance tax what happens to the invested money from the mortgage? It can't get handed over along with the house as it will be liable for the inheritance tax so they leave their son or daughter with a mortgage headache. So whats the point?
How would you go about transferring the invested money seperately to the son/daughter so its not all lumped together in one estate with the house? Although I guess the answer to this is what you pay someone like Tiggs to tell you so i guess the more appropriate question is is it actually possible to transfer the house and the invested money seperately to avoid the tax?
BTW its not something that I need to know the answer to, more a case of was wondering what the appeal of the new mortage is mentioned in the article. I am assuming there must be a way round paying the inheritance tax?
23 August 2006, 12:19 PM
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Unless it's insured. 
And don't start me on IHT, the amount I have had to pay makes me physically sick...even moreso when I see how its being spent on the unwashed masses.
And don't start me on IHT, the amount I have had to pay makes me physically sick...even moreso when I see how its being spent on the unwashed masses.
23 August 2006, 12:26 PM
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Several ways of doing this - One way is to place the money in an investment in a trust for the kids in a will trust. When the parents die the kids get the investment and providing it has been in trust for 7 years there is no IHT to pay. Another way is to gift the money to the kids who then lend it back to the parents on a roll up interest basis. The parents use the loan to pay off the mortgage and the loan rolls up at say 10% a year. When the parents die the kids call in the loan from the estate with all the interest. All the debts are paid before IHT is calculated, so if you do it properly you can set this up so that you have future proofed your IHT plan should the value of the property increase substantially. Then you take out a 7 year term assurance (in trust)to cover any IHT that may become payable should the parents die within the first 7 years. I'm sure Tiggs could give another hundred ways round it
23 August 2006, 12:26 PM
#5
Shark Man, I appreciate that if you pay IHT that someone close to you has died and that its an unfair tax, but surely if you have payed some you will have had either a share of or all of everything below the threshold and 60 percent of what is above it, therefore you have had a fair ammount of cash drop in you lap ?
Now that prospect (not people dying or paying tax) does not make me feel sick.
Now that prospect (not people dying or paying tax) does not make me feel sick.
23 August 2006, 12:30 PM
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Originally Posted by J4CKO
Shark Man, I appreciate that if you pay IHT that someone close to you has died and that its an unfair tax, but surely if you have payed some you will have had either a share of or all of everything below the threshold and 60 percent of what is above it, therefore you have had a fair ammount of cash drop in you lap ?
Now that prospect (not people dying or paying tax) does not make me feel sick.
Now that prospect (not people dying or paying tax) does not make me feel sick.
And thanks FB for explaining that as I didn't realise money could be transferred that way to avoid tax.
Last edited by Bravo2zero_sps; 23 August 2006 at 12:32 PM.
23 August 2006, 12:30 PM
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And Gordon Brown reckons only 6% of estates are caught by IHT
There were some more attempts at tightening up the old trust loopholes in the last budget.
Think they will soon have every hole plugged
.
There were some more attempts at tightening up the old trust loopholes in the last budget.
Think they will soon have every hole plugged
.
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23 August 2006, 12:33 PM
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Originally Posted by J4CKO
Shark Man, I appreciate that if you pay IHT that someone close to you has died and that its an unfair tax, but surely if you have payed some you will have had either a share of or all of everything below the threshold and 60 percent of what is above it, therefore you have had a fair ammount of cash drop in you lap ?
Now that prospect (not people dying or paying tax) does not make me feel sick.
Now that prospect (not people dying or paying tax) does not make me feel sick.
FWIW, I have no cash at all due to this.
23 August 2006, 12:58 PM
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Originally Posted by fast bloke
Several ways of doing this - One way is to place the money in an investment in a trust for the kids in a will trust.
Yes, but our friendly Government are wanting to Tax Trusts then parents die. If this goes through, it will make setting up a trust for your kin, a complete waste of time.
As long as labour stay in power, they'll try to push this through.
They'll no doubt say a recent survey said that 85% of Britain welcomed these measures
23 August 2006, 01:05 PM
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Originally Posted by **************
J4CKO the whole IHT thing is a rip off though, its tax being paid on money thats already been taxed before, ie when it was earnt and income tax and NI was paid on it. It then gets given to the kids who lose another 40% of it. That is a rip off no matter how you look at it.
And thanks FB for explaining that as I didn't realise money could be transferred that way to avoid tax.
And thanks FB for explaining that as I didn't realise money could be transferred that way to avoid tax.
23 August 2006, 01:20 PM
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Originally Posted by **************
Disowned wouldn't be so bad to live with compared to yours killing themselves over bringing such a pathetic cvnt into the World
How's the missus's candle manufacturing business going by the way? Selling much? Or is she having to put those long smooth candles to 'other' uses?
You can't blame her really.
23 August 2006, 01:22 PM
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I don't care about inheritance tax - I'd rather my parents spent all their wealth enjoying themselves in their old age.
It's stamp duty that gets me angry - effectively I'm paying tax on my mortgage (i.e. most properties are bought in part with debt, why pay tax on that but you don't get relief for the interest after?)
It's stamp duty that gets me angry - effectively I'm paying tax on my mortgage (i.e. most properties are bought in part with debt, why pay tax on that but you don't get relief for the interest after?)
23 August 2006, 01:25 PM
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Originally Posted by sociopath
I can feel the love
How's the missus's candle manufacturing business going by the way? Selling much? Or is she having to put those long smooth candles to 'other' uses?
You can't blame her really.
How's the missus's candle manufacturing business going by the way? Selling much? Or is she having to put those long smooth candles to 'other' uses?
You can't blame her really.
23 August 2006, 01:37 PM
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Originally Posted by fast bloke
I'm sure Tiggs could give another hundred ways round it
I don't care about inheritance tax - I'd rather my parents spent all their wealth enjoying themselves in their old age.
Parents dont suddenly hit 70 and start buying plasma screens...if they have wealth and dont plan they will die with that same wealth (less 40%) "spend it daddy, enjoy yourself" may make you feel better but in 20 years time it cost you money and helps your folks not one bit.
23 August 2006, 01:41 PM
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Originally Posted by stilover
Yes, but our friendly Government are wanting to Tax Trusts then parents die. If this goes through, it will make setting up a trust for your kin, a complete waste of time.
Funny that people have a dig at the idea of "selling" advice on IHT........maybe its better to get free infomation like that above (of course its nonsense but hey....its free!)
23 August 2006, 01:41 PM
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Originally Posted by lozgti
And Gordon Brown reckons only 6% of estates are caught by IHT
There were some more attempts at tightening up the old trust loopholes in the last budget.
Think they will soon have every hole plugged .
There were some more attempts at tightening up the old trust loopholes in the last budget.
Think they will soon have every hole plugged
.(I have opted to invest all my money in the SKI IHT avoidance scheme. This is completely foolproof and there is nothing Gordon Brown can ever do about it. If anyone is interested that can send me a cheque for £1000 and their kids will never have to pay a penny of inheritance tax)
23 August 2006, 01:43 PM
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Originally Posted by Shark Man
Unless it's insured.
And don't start me on IHT, the amount I have had to pay makes me physically sick...even moreso when I see how its being spent on the unwashed masses.
And don't start me on IHT, the amount I have had to pay makes me physically sick...even moreso when I see how its being spent on the unwashed masses.
The amount raised is pretty small in revenue terms so, after paying the CTO to get it there isnt much left over to waste!
23 August 2006, 01:44 PM
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Originally Posted by The Snug Rhino
Funny that people have a dig at the idea of "selling" advice on IHT........maybe its better to get free infomation like that above (of course its nonsense but hey....its free!)
23 August 2006, 01:45 PM
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Originally Posted by fast bloke
If anyone is interested that can send me a cheque for £1000 and their kids will never have to pay a penny of inheritance tax)
if youre moving into the IHT market you need to learn how to charge accordingly......add some 0's
23 August 2006, 01:46 PM
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Originally Posted by stilover
No it's not nonsense. I personally don't need to look into, but my Dad does, and pays for advise. Currently he has trusts for his Family set-up, and has been advised that the Government are considering taxing trusts. Fact !!
They have always taxed trusts...your post is wrong in a multitude of ways. The information it gives is wrong, the impression it creates is wrong.....its wrong.
23 August 2006, 02:09 PM
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Originally Posted by The Snug Rhino
dont worry...it doesnt get spent on them.....it gets spent on collect IHT The amount raised is pretty small in revenue terms so, after paying the CTO to get it there isnt much left over to waste!
The amount raised is pretty small in revenue terms so, after paying the CTO to get it there isnt much left over to waste!Its comforting to know that it is spent on employing thousands of half soaked civil servants.
23 August 2006, 02:31 PM
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Originally Posted by Longjing
IHT is a poor tax theoretically and practically, but I don't see either party giving it up.
23 August 2006, 02:50 PM
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Originally Posted by TopBanana
Let's hope not, ey. After all, some people do quite well out of it!
23 August 2006, 03:03 PM
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Originally Posted by The Snug Rhino
if youre moving into the IHT market you need to learn how to charge accordingly......add some 0's
