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
- Tax Allowance on University Course 282 2
- MS Surface Pro 3 239 5
- VAT on cashback card handling fee 167 3
- Excel: MATCH does not match two apparently identical cells 110 2
- Letter from HMRC telling me client passed away 2,031 28
- Company Pension Contributions 2013/14 314 11
- Does anybody still use a Filofax? 681 21
- What is the reasoning behind HMRC letter re high income child benefit charge? 587 10
- We accountants are not the only ones!! 677 4
- Your fondest calculator memories 1,268 45
- practice planning 226 3
- Accounts Software 750 19
- Goodwill Valuation Prior to April 2002, with the intention of selling on due to personal changes 511 14
- Dividend Vouchers 405 5
- Gift to employee 437 14
- Profit accruing in fiduciary or representative capacity 192 3
- HMRC Penalties - are they enforceable? 1,147 37
- Child and Working Tax Credits and sudden increase in investment income - does this trigger a claw back? 219 3
- Anybody have that old ACCA Student Training Record (STR1) 178 1
- Question re Career choice... 1,703 10
- DTR : TIOPA 2010 Section 42 501
- CTA study material 475
- Sect 102 TMA 1970 348
- Pre incorp expenses 339
- Relief on French Tax Deposit? 282
- Anyone have clients that use Pay4Later to offer customers credit? 275
- What is the tax position if I am working overseas but via a UK agency? 221
- Gift Aid after 5 April, before 31 Jan - Tax Credits 178
- Taxation of partners in an LLP following new rules 151
- Employment related securities question 137