Property inherited with income rights restricted
My client, husband and wife, recently inherited 4 let properties from the husbands late uncle
A deed of variation was exercised so the income from these let properties is paid to the widow for the reminder of her life, net of any taxes and expenses
My question is, who is assessable on the rental income?
I suspect what has happened is the property is now held in trust, being a type of Immediate Post Death Interest trust. So for IHT the property will form part of the widows estate as Settled Property coming to my clients as remainder men on her death (and should have therefore been an exempt legacy to spouse in the deceased's estate - I do not know if this was the case). The income will be assessed on the husband and wife as trustees at basic rate producing an R185. On the widows death, the assets will receive an uplift to the then current market value for CGT. Would anyone agree this view is correct?
If this is the case, would you agree I could suggest the income continues to be paid directly to the widow to avoid the requirement to complete a trust Self Assessment Tax Return. Then as the income is not received by the trustees (i.e. my clients) they cannot then be assessed on it as trustees thus eliminating the requirement to complete a trustees tax return.
There is not a trust deed - unless the Will and DOV could be regarded as such?
Or ... am I overcomplicating the position and the income should simply be assessed on my clients personally who will then pay the rents after expenses and tax to the widow as well as them already owning the property for IHT and CGT.
Thanking you in advance for any responses
- Sage Instant Accounts Complete De-install problem 193 6
- Auto Enrolment - Help each other by sharing known problems 725 14
- Self employed and HMRC Worldwide Subsistence Rates 806 1
- HP agreement in Directors name but payments under company 470 10
- Real time 193 2
- Withdrawal of a quote 401 7
- Opt To Tax Refund 257 3
- Paid staff their normal salary instead of SMP 233 2
- Pay rise - how to enter in Moneysoft 220 5
- New (non resident) client not filed in 20 years 603 15
- When to top-up pensions? 185 2
- Support / ticketing software 334 11
- Are Tax Agents designed out of online systems? 333 3
- Imported goods and VAT 147 1
- Annual Return for company for whom director/shareholder has died 439 15
- Divorcing husband, both 50% owners of a Ltd business 595 11
- Stamp Duty 188 3
- Entrepreneur - want to submit accounts by myself 1,867 22
- Company Number 10000000 999 13
- Online accounting provider for multicompany with turnover £10m 372 5
- Interest paid - do new rules affect Tax Credits? 471
- Market Invoice (P2P invoice discounting) tax treatment 290
- DTA tie-breaker issue 281
- CGT for NOn UK residents 244
- Tax Implicatins on a Directors Loan 220
- Apprenticeship Levy 218
- What are the tax implications of overseas sales through a UK based company? 211
- Just checking re PSA 197
- Capital Gains personal representatives 191
- Mandating Rental income or dividend income to a company 177