Inheritance tax

Inheritance tax

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My father along with other trustees owns land. He has 15% ownership.

The property includes;

1). land in prime residential area ,

2). 2 acres are car park and buildings ,

3). 7-8 are football fields. 

Each acre could be worth more than a million £, provided permission is granted which is highly likely. 

I have following questions;

1). When my father dies and the situation  is unchanged what is my tax liability ?

2). How would the value of this asset be determined for the purpose of inheritance tax ? 

What are the measures we could take now to significantly reduce/avoid paying inheritance tax (when the property is transferred into my name).

Replies (13)

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By BigBadWolf
04th Dec 2013 14:46

PET

Ask your father to transfer the property to you - and make sure he doesn't die for 7 years

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Replying to Mr_awol:
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By Shahid urrehman
04th Dec 2013 15:40

Should he just transfer the property into my name, or should my name be included in the trust as the one who will get the property? Moreover, is there any other tax I should be worried about? Best Regards,

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By mrme89
04th Dec 2013 15:02

If your father has assets that are potentially valued at £m's, do you not think you should be paying for some professional advice?

 

This forum is great, but it's no substitute for seeing a professional in these cicumstances.

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Replying to Andy001:
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By Shahid urrehman
04th Dec 2013 15:51

thanks

My father has, I dont. So basically he is not bothered about paying taxes, but I am, specially when there are legal ways to reduce taxes. thanks,

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David Winch
By David Winch
04th Dec 2013 15:03

Get (paid for) professional advice

In this situation there are a number of taxes you may need to consider (not just Inheritance Tax) and a number of possible ways forward.

You really need to get proper face-to-face professional advice based on a full discussion of the facts and your future intentions.  Of course you will have to pay for it.

David

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Replying to MJShone:
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By Shahid urrehman
04th Dec 2013 15:38

Thanks David

Can you please summarise the name of the taxes I have to consider. Be very grateful.

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By Jim100
04th Dec 2013 16:00

complex

Inheritance tax is one tax that is not mentioned often on accounting web due to the complexity hence why it has been mentioned twice and now the third time to take professtional advice espeically since we are talking about a vast sums of money and there is so much to go through e,g will, valuations, tax planning etc.  With due respect it will take a professsional adviser some time to shift through the issues and try to mitigate the tax that maybe payable in future.  Its good though you are thinking on the lines of inheritance tax as people ignore it until its too late. 

One other point to consider where the assets are divided if there is no contract the share could possibly go to the other partners and not to yourself.

Finally this forums are for accountants to share knowledge between themselves

 

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By Kirkers
04th Dec 2013 16:13

This guy claims to be an accountant on his other questions.

Sounds more like a 'client' has asked him these questions, he doesn't know the answers so he's come on here pretending it's about himself.

 

 

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By cfield
04th Dec 2013 16:22

Here's a tip

If you are an accountant, see if your PI policy has a helpline for tax queries. It's no substitute for face to face advice by an expert based on all the known facts, but at least they will answer the questions that occur to you (which may not be all the ones you need to ask)..

In fact, if you know very little about IHT, CGT, etc, you shouldn't really be trying to advise at all. Just refer it to a tax advisor.

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By The Innkeeper
04th Dec 2013 16:23

@kirkers

or homework questions me thinks

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Northumberland flag
By MJShone
04th Dec 2013 16:23

Shahid

A good adviser will cover all the possibilities for you, but you need to be considering at least: inheritance tax, capital gains tax, income tax (and the anti-avoidance around transactions in land), stamp duty land tax, possibly VAT. (And I'm no doubt missing something!)

You say your father "and other trustees". Presumably your father owns the land in more than his capacity as a trustee ie it is his 15% share of the land?

As others say - you need proper advice - this isn't a quick question appropriate for this forum. Your father needs to be involved too, evn though the saving of inheritance tax may be for your benefit.

Very quick and dirty answer to your numbered questions:

If your father does nothing and you do indeed inherit the land, inheritance tax will be payable at 40% on the open market value of the land at the date of his death, subject to any possible reliefs (which don't look likely) and the availability of the nil rate band.

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By ArsalanShah
05th Dec 2013 06:29

Are you sure what you are talking about??

A person having £££ million assets and you are saying NOT bothered to pay taxes???? isnt it tax evasion Mr...?? hope u come up with an acceptable explanation to this ..secondly i agree with fellow writers that you are better off seeing some professional and get some paid consultation..if you are an accountant then it seems very unprofessional and against business ethics to manipulate the situation and bring it up as a personal matter this is one thing.Further,if you are not accountant then you are advised to go and seek some professional because i doubt that such problem is going to get solved on such discussion forum..simple is that.

Hope this helps.

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By johngroganjga
05th Dec 2013 08:18

Your question suggests that you father is trustee (one of a number) in respect of the land. If that is the case, for IHT purposes it belongs to the beneficiaries not to the trustees.  So unless your father is a beneficiary as well as a trustee you don't need to worry about IHT in relation to it.

The other taxes you need to consider are CGT and SDLT, which will come into play of the land is transferred (but for CGT only during the owner's lifetime). 

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