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Inheritance Tax Penalty: who pays?
- Thread starter CatRyan
- Start date
Each individuals responsibility to report it and pay it I think within 90 days of receipt or something like that
Hucknalls Fluffer
Midfield
Its the estate that’s liable but the executor pays the bill. They normally do this by selling assets from the estate
DisillusionedOldGit
Winger
Probably best to speak to an accountant first . My parents put all their properties in our joint names which doubled our tax allowance . Get as low a valuation as you can get away with as well, I valued ours . The tax is only on the increase in value since you inherited it anarl . You're allowed about £12,000 per year . speak to an accountant . And give me some of the money .
Charmless Man
Striker
Sounds like one for Angela Rayner’s tax advisor this.
Cgt if applicable needs paying up front prior to death.
Looking at transferring a flat to my daughter's and could be stung with a very hefty bill
Edinburgh Black Cat
Striker
Sounds a wee bit tax evasiony that like.
CGT allowance is down to £3k this year btw.
Was only at 6 anyway after being chopped from 12
Did they not want an official / RICS valuation? Doing your own would be a conflict of interest.
Sounds bit dodge. Are people allowed to just value their own properties for the purpose of lowering tax liabilities? I imagine HMRC would take a very dim look on it, but not something I have experience with.
As others have said, allowances have been slashed from 12, to 6, to 3k now.
Prices from a couple of agents I think..
Case of binging them a drink each to get it 10-20% below..
DisillusionedOldGit
Winger
Back then I think I told our accountant what we sold one for and he worked it all out and put into our tax statement . It was all a long time ago .
Nobody consulted me . on that one . It was 12 back then or 11 or smmat .
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Darlo1973
Striker
If an Executor was personally liable then who would want to be one? It's a lot of work for no reward.
Hucknalls Fluffer
Midfield
The executor is pays the tax but they use the assets from the deceased estate to do it.
An example might be an IHT bill of £250k but a share portfolio of £750k. The executor would be able to sell £250k of shares to settle the bill and then distribute the assets to the beneficiaries.
PickNickering
Full Back
It depends really. Are you talking about an actual penalty for late filing of the IHT return or interest payable on unpaid inheritance tax?
If it’s the former then the executor should be liable as it’s potentially negligence. The beneficiaries have every right to question why the return has not been filed in time.
If the latter then the residuary estate bears the burden. In some cases it’s unavoidable having to pay interest- for example an estate where there aren’t many liquid assets but where the assets consist of property.
If it’s the former then the executor should be liable as it’s potentially negligence. The beneficiaries have every right to question why the return has not been filed in time.
If the latter then the residuary estate bears the burden. In some cases it’s unavoidable having to pay interest- for example an estate where there aren’t many liquid assets but where the assets consist of property.
Edinburgh Black Cat
Striker
I don't really think along those lines any more. Generational wealth compounds exponentially over time, and creates huge divides between those who have and those who have not. Plus there is a large allowance it doesn't apply to, so your family still receive a good sum.
The major problem is that those with extreme amounts of money find other loopholes to avoid it anyway.
PickNickering
Full Back
That is so true. Inheritance tax has often been called a voluntary tax as there are so many ways to avoid paying it. Also, the allowances - transferable nil rate band and the residence nil rate band mean that most normal people these days don’t pay inheritance tax.
Kent_Mackem
Striker
It was brought in I believe, to address the problem of enormous amounts of wealth staying squirrelled away in a small collection of incredibly wealthy families rather than being shared out a bit more.
From the perspective of any recipient an inheritance is a freebie that they have not earned and are lucky enough to have handed to them. I can't see an issue in paying tax on that freebie. The tax is only payable above a certain threshold anyway.
It is never going to affect me anyway, but I've always considered paying a large amount of tax is a nice problem to have.
CatRyan
Striker
Well it turns out it was was the latter so no issue but the inept Executor mistook the partial interest payment for a penalty and said it was a penalty which caused a brouhaha for a day or so until wiser heads prevailed.
The thing is that the incredibly wealthy families just tie it all up in trusts etc and don't pay a penny in tax. In London you're never going to find a decent property below the threshold so I know of instances where it means people are made homeless as a result. My friend Web drowned abroad and his son inherited but was just starting University and found himself either homeless or with a massive tax bill.
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