Deferring Tax Payments
There are several simple but important ways that you can reduce your Inheritance Tax bill. Indeed, the size of the industry that has grown up around Inheritance Tax (IHT) avoidance is testament to the variety of methods by which it is possible to cut an IHT liability. This is good news for those with estates with a value that exceeds the Nil-Rate Band (currently set at £325,000).
However, if you are the beneficiary of a will or estate, as opposed to the estate owner, you may have had no say in the deceased individual’s IHT avoidance activities. The fact of the matter is that most people still do not take any action to mitigate the Inheritance Tax bill that will be faced by their beneficiaries. As such, if you are a beneficiary of a will you might find yourself forced to settle a significant IHT liability.
Calculating and Paying IHT
The process of calculating and paying Inheritance Tax can be confusing. In the first instance the estate needs to be valued. The nominated personal representative of the deceased individual will be charged with working out how much the relevant assets are worth, and therefore how much tax is due to be paid. This can be a complicated task, and many people choose to enlist the services of a professional to carry it out.If it is thought that Inheritance Tax is likely to be due, you will need to fill out three forms: Probate application PA1; IHT form IHT400; and Probate summary IHT421. Having filled in and returned these forms you will receive an Inheritance Tax statement detailing how much you owe. This IHT payment is due within six months of the end of the month in which the individual died.
This can represent a significant burden, particularly if you were financially dependent on the deceased individual. Thankfully, certain parts of this tax bill can often be deferred.
Property or Land
Any IHT accrued on property or land can be deferred for up to 10 years. This is particularly beneficial as the majority of most people’s estates tend to be accounted for by their family home – on which this deferral is available. If you choose to take advantage of the deferral you will be expected to make payments of equal instalments over a period of up to 10 years; it is not normally necessary to take the full 10 years if you do not wish. It is important to remember that interest will be charged on the outstanding balance. As such it is generally best to pay it off as quickly as possible, unless it is likely to cause you cashflow problems.If you know that you will be a beneficiary of a will, it is always worth talking to the individual in question in advance in order to encourage them to take steps to mitigate any IHT liability that you may eventually face. Although this can be a difficult subject to broach, it is an important conversation to have. An Inheritance Tax bill should be dealt with proactively, rather than retrospectively, in order to ensure that as much of the estate is passed to the beneficiaries as possible – rather than to the taxman.
Re: Will Inheritance Affect My Council Tenancy?
Im facing similar situation. Inheritence only enough to buy foreign property, agricultural holding, or derelict…
Re: Inheriting Property
Am I allow to get housing benefit on my mums property till its sold?even though I will eventually be entitled to 25%of the sale
Re: Inheriting Property
Am I allow to get housing benefit on my mums property till its sold?even though I will eventually be entitled to 25%of the sae
Re: Will Inheritance Affect My Council Tenancy?
I am living in temporary council accommodation and due to illness am receiving PIP plus Universal Credit. I am…
Re: Will Inheritance Affect My Council Tenancy?
I’m a council tenant my died and left a flat over 55 to live in that buliding to me how’s do I go ambition…
Re: Will Inheritance Affect My Council Tenancy?
I doubt this will be answered as I can’t see any answers to anyone else’s comments but here goes My mum wants…
Re: Will Inheritance Affect My Council Tenancy?
I have inherited property from my mother in law, as we live in council property could we rent the inherited…
Re: Will Inheritance Affect My Council Tenancy?
Assured social housing tenant (SH), lone parent recently deceased leaving an estate including a 3 bedroom…
Re: Will Inheritance Affect My Council Tenancy?
My disabled son lives in a council flat and receives benefits, including PIP. How could I arrange for him to…
Re: Will Inheritance Affect My Council Tenancy?
me and my brother are set to inherit 2 propertys but we have council flats. will we loose our rights to council…