Inheritance tax sparks rental crisis as landlords hit by frozen thresholds

Reply to the comment left by Seething Landlord at 16/12/2024 - 12:11The OP was talking about 'millions' so I assumed gifts of at least £325,000 had already been made.

Reply to the comment left by Dennis Forrest at 16/12/2024 - 12:41That's as may be but it is clear that the taper in the rate of IHT is widely misunderstood, particularly by journalists and the public at large, who believe that it applies to all gifts of whatever amount.

Reply to the comment left by Retired GasMan at 16/12/2024 - 10:25
IHT must be paid before Grant of Probate, but until Probate is granted, beneficiaries often don't have access to funds. But not to worry, you can take out a loan or pay HMRC over 10 years at extortionate interest. However, if your estate included a pension pot, there would have normally been some money free of IHT to pay towards the IHT bill. But now, your pension provider will have to pay IHT on your pension pot, and your beneficiaries will also have to pay tax on whatever is left. Criminal!

Reply to the comment left by Dennis Forrest at 16/12/2024 - 12:34
It was very good of you Dennis to write in such detail about Insurance. I will give it the care it deserves but unfortunately in my late twenties I was diagnosed with Rheumatoid Arthritis and the life expectancy is 77. No wonder the last time I saw my Rheumatologist he said I had done very well, and I did think of saying 'am I meant to be dead then!' RA has affected everything from my eyes to my feet. So you see I don't think any Insurer would look at me. I've searched high and low for advice on Inheritance tax, and gone to some award winning solicitors but all to no avail. I did give away a long time ago a smaller house I owned to my children, but I could not give any of the larger ones as the CGT was enormous. 

Reply to the comment left by Yvonne Francis at 16/12/2024 - 15:30There is a wealth of information out there on the disastrous effects of the budget on IHT and pensions. But if you have a significant potential IHT liability and a pension pot, I would recommend you pay for some specific advice from one of the various wealth managers out there (I can't recommend St James's Place!). I use a firm called Netwealth.com.
In the meantime, if you can afford it, start gifting large sums to children rather than saddling them with a large tax bill... and hope to live 7 years... or until this government is kicked out!

We can each leave £325k and a further £175k in residential property.

For a couple, that is £1m.

Probate can take anything from a couple of month to a couple of years. IHT needs to be paid within six months. If it’s not paid, the Executor for the Estate can elect to pay interest.

It is really important to have a quality Will, drawn up by an expert and reviewed at least annually.

Sure, if I sell, I’ll pay CGT and there’ll be less to leave for my children. But, if they don’t want to be burdened with tenants, that is the cost that they will pay.

Having one or two tenants to deal with is much easier than having 17 or so.

I recommend that landlords have a chat with those that are likely to be left behind.

Reply to the comment left by Yvonne Francis at 16/12/2024 - 15:30
Sorry to here about your RA. Hope you continue to dumfound the medical experts. It is too late for you now but we had one property which we bought for £50,000 and was 20 years later worth around £300,000 which we wanted to give away so we transferred it over 5 years, 20% at a time, which meant each tax year we each of us had 2 lots of around £12,000 CGT allowances which cut the amount we paid in CGT by quite a lot.

Reply to the comment left by Dennis Forrest at 16/12/2024 - 10:40Mortgage them up to the hilt to withdraw equity before it's too late, then spend the money or gift it at least 7 years before you die. Then you have 75% less to pass on when you do die.
I'm also wondering about putting mine into joint ownership with my son in future (no hurry right now as I'm only 56), so that I'm only passing on 50%, but I don't know if that would attract significant CGT.
Failing that, I've heard about gifting property to a Ltd company, which might be a way to get extra allowances.

If contemplating gifting large amounts, be aware that anything more than £325,000 within a 7 year period will be a chargeable lifetime transfer and generate an immediate liability to IHT at the rate of 20% or 25%.

Reply to the comment left by Seething Landlord at 17/12/2024 - 00:25
To my knowledge, anything over £325k gifted within the 7 years before your death, is subject to taper relief.