Potential Inheritance Tax Liabilities

Read Complete Research Material

POTENTIAL INHERITANCE TAX LIABILITIES

Potential Inheritance Tax Liabilities

Table of Contents

Introduction3

Benefits and Drawbacks of Mitigating Inheritance Tax4

Benefits4

Drawbacks7

Reduce Potential Inheritance Tax Liabilities9

Mitigating Inheritance Tax12

Tax Rate12

Inheritance Tax Liability in different Scenarios13

Summary15

Potential Inheritance Tax Liabilities

Introduction

To reduce potential Inheritance Tax liabilities, married couples or people in civil partnerships, it is vital once the parties have the inheritance of a deceased and each heir has accepted his part of the same; therefore, the assets and rights that belong to it, it must settle the inheritance tax. Inheritance Tax is a tax on capital gains obtained free or for profit by individuals, as received from an inheritance. It is important to understand the legitimate ways that how married couples or those in civil partnerships can reduce their potential Inheritance Tax liabilities.

The assessment and payment of Inheritance Tax is, together with the transfer of the document to the records, and the last step (except for partial liquidation or presentation prior to acceptance of inheritance) in the process of succession. Furthermore, the positive or negative result of the liquidation of the Inheritance Tax will depend on the knowledge of the applicable legislation, benefits and exemptions which enjoys each taxpayer and the application of the same in each settlement. It is important to note that the inheritance tax is a direct tax on loan from the State to the autonomous communities, which involves, on the one hand, that the proceeds will go to each autonomous community as appropriate, and other hand involves the transfer of certain regulatory powers, which in practice means that each autonomous community may regulate its own taxable base rates, exemptions and deductions, determining what ultimately should be paid. This means that the assessment and payment of inheritance tax varies depending on the autonomous community in question. Being a financial adviser of a chartered accountant firm, it is vital that the clients should follow the given assessment and payment of Inheritance tax, applying the tax benefits that will be vital for the Inheritance Tax liability.

Inheritance Tax levied at 40 % on that part of the deceased's estate, which exceeds £325,000. So, it does appear on the surface that there could be a potential inheritance tax liability problem where, as is the case today, land and buildings are fetching prices well especially in excess of agricultural land value; but to protect the future of the farming industry in the country there is something called Agricultural Property Relief. There are, however, specific conditions set out in the legislation which must be complied with in order to qualify for Agricultural Property Relief. Therefore, it is advisable to married couples or those who are in civil partnerships to review their affairs regularly and take advice from a lawyer who specializes in such matters, to ensure their business structured in such a way that people in civil partnerships or married couples can take full advantage of the relief. If, at any stage, they decide to change the way to run a business or want to raise additional capital, or if married couples or those who are in civil partnerships or their sons should decide to diversify out, ...
Related Ads