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Inheritance tax, no change is likely until 2020 and beyond

Person working at desk with laptop, calculator, newspaper, mobile phone, clipboard, paper and pen

Although the Chancellor has set in motion a review of inheritance tax there seems little chance of any reforms being enacted in the near future.  Any worthwhile reform will be controversial and the government’s obsession with Brexit and its lack of a working majority are pretty much guarantees that any recommendations, which might come out at a review, will sit in the long grass.

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Deed of variation – not just to save inheritance tax

Piggy bank which is full, coins spilling over to the side

The usual reason for entering into a deed varying a will within 2 years of death, is to secure an inheritance tax reduction or to skip a generation so that a gift is removed from an affluent beneficiary and diverted to his impecunious children.

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Ken Dodd – tax efficient to the last

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No-one can avoid death or taxes but Ken Dodd at least managed to minimize the latter in his final days.  The key of course was marrying his long-time partner and instantly getting the benefit of total exemption from inheritance tax as a result of the spouse exemption.  He would of course have had to make a will immediately after the marriage, or may be just before but in contemplation of the marriage, because otherwise Ken’s late entry into matrimony would have cancelled any previous wills, even if they were in favour of the partner.

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The latest on the residential nil-rate band

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According to press reports it seems a strong possibility that certain estates have not been claiming this extra inheritance tax allowance which applies when residential property is left to the children (including step-children and adopted children) and to grandchildren or other direct descendants.  The provisions governing its application are complex.  Possibly those administering estates themselves without expert assistance are missing out. 

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Tax and Complexity – closing remarks

It is now accepted wisdom that societies are becoming more unequal. Fewer people at the top are holding more and more of the wealth, while those at the bottom struggle to make a living with a reducing number of supports which were available in the past. For example, secure employment, final salary pension schemes, affordable housing, a functioning NHS etc etc. Complexity must be playing a part. Only governments and huge businesses really have the resources to profit from the opportunities of digitalization. What may emerge is a kind of deal between governments and the Googles and Amazons by which the latter agree to increase their tax contributions in return for being left alone to capitalize on their semi-monopoly positions.

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549 Hits