An article in the Telegraph on 18 August by Harry Brennan is entitled “How you can shield £975,000 from inheritance tax with this little-known trick” . The trick includes a widow making a lifetime gift of £625,000 to a discretionary trust using her dead husband’d transferable nil rate band. Ignoring annual exemptions I make the bill £65,000. Is this fake news?
Jack Harper
I think on reflection the author may be referring to a will trust of £650000. In which case there is a different omission; not warning of the positive rates of tax on subsequent distributions out of an RPT and at a 10 year anniversary where the initial sum settled exceeds one NRB. As a sometime (part time) tax journalist but with very specialist practitioner’s knowledge I met many gung ho others whose garbled regurgitations from briefings by specialists were truly dangerous. I think lay readers are entitled to be taken through any technical plan on a Janet and John basis.
Jack Harper
I fear it is badly written.
Lucy Orrow
Lambert Chapman LLP
I agree. Unfortunately he has on occasion written articles which I found confusing. Perhaps he is flashing them before the wrong specialists.
Patrick Moroney
BWL
Agree that this is a poorly worded article as there would be tax issues as the subject would not be able to use a transferrable NRB when making lifetime gifts.
I didn’t see the article but presumably one spouse dies (X) not having used their NRB. Surviving spouse (Y) during lifetime. sets up a £325k DT thus using their own NRB. However, if Y then survives the subsequent 7 years Y, on death, has their own NRB plus a 100% transfer of X’s NRB ie 650k which is settled on death.
In essence Y has passed on 975k.
My experience of newspaper articles on IHT, even those appearing on the Finance/Money pages, are usually incomplete and as a consequence misleading. I often received calls from clients on Monday mornings saying they had read so and so in the Sunday Times or wherever and why hadn’t I told them about the IHT saving wease.
Malcolm Finney