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Inheritance tax, estate tax and death duty are the names given to various taxes which arise on the death of an individual. In international tax law, there is a distinction between an estate tax and an inheritance tax: the former taxes the personal representatives of the deceased, while the latter taxes the beneficiaries of the estate. However this distinction is not always respected. For example, the "inheritance tax" in the UK is a tax on personal representatives, and is therefore, strictly speaking, an estate tax.
In the United Kingdom, Inheritance Tax was first introduced as a tax on estates in England and Wales over a certain value from 1796, then called legacy, succession and estate duties. The value changed over time and the scope of estate duty was extended. By 1857 estates worth over £20 were taxable but duty was rarely collected on estates valued under £1500. Death duties were introduced in 1894, and for the next century were effective in breaking up large estates.
Currently, 94% of all estates escape Inheritance Tax, mainly because they fall in the nil rate band.
For the 2007/2008 tax year, the IHT rate is 0% on the first £300,000 (the "nil-rate band), and 40% on the rest of the value, at death, of an individual's tax estate. The nil rate band rises annually; tax is only payable on the value of an estate above the nil rate band.
In the 2007 budget report the Chancellor of the Exchequer announced that the nil rate band is to rise to £350,000 by 2010. This is said to take into account the sharp rise in house prices in the United Kingdom over the past few years, although in fact due to the credit crunch and recent falls in the value of property this may be reversed. How To Leave More To The Kids ARTICLE SUMMARY: A look at some of the recent changes in inheritance tax laws and how to take advantage of them.
By : Catherine Harvey 
Submitted 2008-05-11 20:59:01
Inheritance tax has undergone some changes of late that make it a much simpler process to leave your money and property to your children without them paying the penalty of inheritance tax quite so soon.
Will writing is sometimes a complicated business and people do not always realise the implications of what they leave to the people they leave it to. Anything over 300,000 pounds for an individual would incur inheritance tax and combining a couple's nil rate allowance was a little complex.
The couple would need to own separate shares in a property as tenants in common and set up a discretionary will trust when writing a will so that anyone inheriting their estate would not have to pay inheritance tax until they breached 600,000. pounds.
Although these so-called new changes are giving people what they already have, it does make the whole process easier. This change affects around 35,000 people a year in the UK which may not seem a lot overall but that is a lot of money that tax man makes!
By 2010 it is promised that the nil rate tax band for inheritance tax will increase to 350,000 pounds per person, or 700,000 pounds per couple. This is something that needs to be taken into consideration when will writing so that arrangements can be made for your children to receive as much as possible without paying penalties.
Opposition parties suggested the upper limit should be closer to one million pounds but The Chancellor put a stop to this and promised to spend the extra revenue on health and education. He has also promised that inflation and current house values will be taken into consideration when setting tax limits and as we all know this is a turbulent area of the country's finance at the moment.
Civil partnership couples will also receive the same tax benefits as married couples but not those that simply live together; proper arrangements need to be made when will writing.
There have been several occasions reported in the press, and many that have gone unreported, where will writing has not taken into account the difficulties of inheritance tax. This recently happened to an elderly woman who had lived with her sister all her life in one house. When one of the sisters died without proper consideration to will writing, the other was forced to sell her home in order to meet the charges of inheritance tax.
This seems rather a cruel way to end your days and if inheritance tax is not taken into consideration when will writing it can lead to the inheritor becoming deeply in debt. Never leave these matters to chance. Never assume because you have written down your wishes that that is the way things will go after your death.
When will writing, always ensure you get a professional to check over it and see if there is anything you can do to relieve the tax burden on those you wish to help after your death.
Over two million homes in the UK are now worth more than the 300,000 pounds inheritance tax bracket and the incidence of problems are occurring are becoming more widespread. By 2020 it is estimated that over four million homes will be subject to current inheritance tax laws. A tidy little some for the chancellor to inherit if will writing is not undertaken correctly.Author Resource:- Financial expert Catherine Harvey looks at the way will writing should take tax laws into account. To find out more please visit http://www.willdrafters.com/ Article From The Laughing Camel Tickler Search for Other JackC Articles Using These Tags:
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Home to the Laughing Camel | ↑ Grab this Headline Animator Britons Shown To Be Looking For Financial Helping Hand ARTICLE SUMMARY: With rises in the cost of living showing no signs of abating, consumers are increasingly looking towards older members of their family to supplement their finances. By : Tom Dawson
Submitted 2008-06-06 14:31:47 With rises in the cost of living showing no signs of abating, consumers are increasingly looking towards older members of their family to supplement their finances.
This is the claim of Engage Mutual Assurance, in which a recent piece of research indicated a significant number of Britons are looking towards the cash windfall received in an inheritance. Citing research carried out by Capital Economics, the firm pointed out that households are currently putting just under a third (31 per cent) of their disposable income towards essentials. As such, it was claimed that people's ability to get on to the housing ladder, send their children to private school or meet other monetary goals comes under more strain.
Following on from such present difficulties with money it may be possible that consumers are struggling to meet various constraints on their finances, whether this be credit card and loan repayments or household bills and transport costs.
The study showed that just under a quarter (23 per cent) of Britons claim that without getting cash from an inheritance they will be unable to pay off their mortgage. Meanwhile, just over one in ten (11 per cent) respondents do not think that they will be able to own their home if they do not inherit money. In addition, 17 and 12 per cent of those questioned respectively claimed that the lack of an inheritance will impact upon their ability to purchase a new car and retire from work. Some three per cent declare that not getting such a windfall means that they will not be able to afford to get married.
However, it was suggested that such consumers pinning their hopes on an inheritance windfall from an older relative could be unwise. Engage Mutual pointed out that more than half (54 per cent) of retired Britons claim that they are struggling to make ends meet. Meanwhile, an estimated 7,900 pensioners were shown to declare bankruptcy over the course of last year.
Karl Elliott, 3GB spokesperson for Engage Mutual, said: "Our previous 3GB research has shown that Britons are already struggling to pay for everyday costs like bills and the household shopping, so we wanted to know how they could afford larger items like paying off their mortgages. It is worrying that so many people have to depend on inheritance to be able to pay for these things. Whilst inheritance can be a great financial help it is not something we can control. We encourage people to take control of their families' futures and save little and often; even ten pounds each month could make some difference in the long run."
For those consumers concerned about they will achieve future financial targets, applying for a debt consolidation loan might be recommended. In doing so, it may be possible that borrowers can meet various spending commitments quickly and affordably, thus leaving them with more disposable income. Such a loan could be of particular assistance to those struggling with their spending in the wake of the credit crunch. Earlier in May, Chris Tapp, director of Credit Action, claimed that people may have to take steps to reduce their expenditure by cutting back on luxury items - such as CDs and computer games - as pressures on their finances intensifies. Author Resource:- Tom Dawson is the Editor in Chief for Essentially Home Loans where visitors can apply for cheap loans online. We also specialise in loans for debt consolidation, and cheap secured loans. Visit our site today http://www.essentiallyhomeloans.co.uk Article From The Laughing Camel Tickler Search for Other JackC Articles Using These Tags:
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