We know many of our clients don’t really want to think about this issue.  However, death and taxes are life’s two certainties. For the 2011/12 tax year, the threshold at which inheritance tax bites into an estate is £325,000. This is really low, as especially in the Cambridge, Huntingdon, Ely area, as many houses are now worth far more than £350,000.  Yet tax at 40%, a really swingeing rate for many people, is chargeable on anything above this threshold.  The good news is that recent changes allow a married couple to transfer any unused allowance. However these days, the cost of old-age nursing care means we suggest you investigate more sophisticated approaches.

What we do is to ensure you fully understand the impact of all taxes, reporting requirements, and any family or special transactions you might undertake. For instance:

• Inheritance Tax:  We and other  experts say that inheritance tax is “optional”. What we mean is that those who take  proper advice can avoid much of it. It’s the taxpayer who doesn’t seek advice who pays. So if you think a member of your family has an estate valued at more than this threshold, it pays to take advice. In fact, the earlier you take advice, the more you can do to reduce the inheritance tax bill.
• Writing a Will: we often help clients write their will. If you don’t write a will, it makes things more difficult for those left behind. What’s more, your estate could be divided up in ways you certainly don’t expect, particularly if you have a large, extended family.

Transfer of Valuable Items

If you plan to transfer the ownership of an item to someone else whilst you are alive, usually someone in your family, then there can be tax issues.  Often our clients transfer items to their children or cousins at a valuation rather less than its market value. Often we can utilise the various reliefs from capital taxes to transfer the item “tax-free”, and certainly to minimise the amount of tax payable. Nevertheless, there is a reporting requirement, which means you have a duty to report the transaction to HMRC, i.e, to complete a self-assessment tax return.

Sometimes, stamp duty is payable.  If the transaction wasn’t properly conducted, then there could be interest and penalty charges. The nightmare scenario is that the item might not have been legally transferred to the other person, if the stamp duty wasn’t fully paid.  Of course, we advise our clients on their stamp duty liability, and arrange for the documents to be “stamped”, as the law requires.