Inheritance Tax Joint Allowance Pitfall

April 4, 2018

 

When the government announced the new joint allowance there where a couple of things the press may not have been completely clear about - commonly they announced that the new allowance was £1 Million for couples.

 

The current tax free allowance before Inheritance Tax is £325,000 (Nil Rate Tax Band) plus an extra £125,000 (from 6th April 2018, Resident Nil Rate Tax Band) if the deceased passes £125,000 to a direct decedent as apart of a property.

 

However...........

 

During this example we will use Mr and Mrs Smith. If the joint allowance is passed on to the spouse (Mrs Smith) on the death of her partner (Mr Smith), Mrs Smith’s Executor's upon her death could be asked to show records to prove that Mr Smith did not give any gifts worth over £3000 per annum, for up to seven years before his death.  

 

Therefore, Mrs Smith would need to keep bank statements from up to seven years before her partner death to give to her executors upon her death.

 

Wow, try getting seven years’ worth of bank statements right now from your bank let alone a partner that is now decease and that's if you remember at the time. Although achievable it could be very difficult and time consuming, luckily Bluecoat may have the solution you are looking for.

 

 

(This is not financial advice)

  

 

 

 

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