Inheritance tax allowance increase in 2018

Information and questions about the Law in Spain and Andalucia.
D1ckyS
Tourist
Posts: 11
Joined: Thu Jan 28, 2016 4:19 pm
Location: West Sussex

Re: Inheritance tax allowance increase in 2018

Postby D1ckyS » Sun Oct 29, 2017 11:57 am

elusive wrote:Re the seven year. A neighbour who did trust planning etc said in reality the 7 seven year rule doest excist because if HMRC thinks the asset was given away with the intent to avoid taxes they can go after you at any time .of course its only relevent if the estate is above the IHT limit anyway.


I think your neigbour may be being too cautious. The 7 year taper relief rule on gifts is detailed on the UK government website and details the sliding percentages that apply to sums gifted over the £325k allowance. You can give away as much as you like but it will be taxed on this scale if you don't live for 7 years.

Paddy Pumpkin
Andalucia.com Amigo
Posts: 66
Joined: Mon May 01, 2017 12:06 pm
Location: Madrid

Re: Inheritance tax allowance increase in 2018

Postby Paddy Pumpkin » Sun Oct 29, 2017 6:10 pm

On a slightly different butvrelated note. Does anyone know how IHT is applied in Spain to UK properties that are Joint tenancies?

Specifically.....Joint tenants can’t pass on ownership of the property in a will to anyone. The surviving joint tenant continues ownership.

So the property cannot be left in a will so the survivng tenant is not inheriting the property.....does that mean it falls outside ofthe scope of Spanish IHT?

elusive
Resident
Posts: 1015
Joined: Sat Apr 07, 2012 11:49 am
Location: frigiliana

Re: Inheritance tax allowance increase in 2018

Postby elusive » Sun Oct 29, 2017 10:30 pm

D1ckyS wrote:
elusive wrote:Re the seven year. A neighbour who did trust planning etc said in reality the 7 seven year rule doest excist because if HMRC thinks the asset was given away with the intent to avoid taxes they can go after you at any time .of course its only relevent if the estate is above the IHT limit anyway.


I think your neigbour may be being too cautious. The 7 year taper relief rule on gifts is detailed on the UK government website and details the sliding percentages that apply to sums gifted over the £325k allowance. You can give away as much as you like but it will be taxed on this scale if you don't live for 7 years.


Sorry i ment they can go after you even if the person lives more than seven years if they think the reason for giving away the asset was to avoid tax. No idea myself as i should be so lucky to get grannies ex london council house "gifted"

El Cid
Andalucia Guru
Posts: 13488
Joined: Sun Oct 24, 2004 10:42 pm
Location: La Herradura, Costa Tropical, Granada

Re: Inheritance tax allowance increase in 2018

Postby El Cid » Sun Oct 29, 2017 10:39 pm

Paddy Pumpkin wrote:On a slightly different butvrelated note. Does anyone know how IHT is applied in Spain to UK properties that are Joint tenancies?

Specifically.....Joint tenants can’t pass on ownership of the property in a will to anyone. The surviving joint tenant continues ownership.

So the property cannot be left in a will so the survivng tenant is not inheriting the property.....does that mean it falls outside ofthe scope of Spanish IHT?


Look at it another way. Has the survivors asset base increased as a result? Yes, they have and the change wold have to be declared on Form 720. My best (after dinner) guess is that the Spanish taxman will ignore UK law and just make it liable to tax. It’s a bit like ISAs, they are tax free in the UK but not in Spain.

You need a pro to answer this one.

Sid

Paddy Pumpkin
Andalucia.com Amigo
Posts: 66
Joined: Mon May 01, 2017 12:06 pm
Location: Madrid

Re: Inheritance tax allowance increase in 2018

Postby Paddy Pumpkin » Sun Oct 29, 2017 11:31 pm

yes true, there are many types of income that is tax free at source but the Spain taxes it if you are a resident. I have tried the pros....waste of time so far! I haven't yet found one I am happy with and that gives correct information. It seems I have read more on the subject than them and they just want to try to sell me a solution to a problem I don't have.

AkoAko
Andalucia.com Amigo
Posts: 122
Joined: Wed May 03, 2017 7:06 pm
Location: Spain

Re: Inheritance tax allowance increase in 2018

Postby AkoAko » Mon Oct 30, 2017 10:03 am

I think i would be inclined to initially show my portion of the value of a property owned in this way as 100% on the 720 . This seems to be an honest and logical assessment due to the fact that each of the joint owners while living legally owns 100% of the property as opposed to 50% when bought as Tenants in Common ( i could have that wrong , it might be the other way around ) so when one dies they gain nothing their wealth has not increased so they have no gain or inheritance to declare, only when the property is sold while both living are the proceeds divided , until then neither owners have the right to pass on their share to another in any manner including bequeathing it in their will . For more than one person to each own 100% isnt logical in reality but this is a legal matter in the same way loans granted to more than one person makes all the signatories liable for 100% , institutions dont expect each to repay them the full amount but cover themselves legally so that they can chase either for more than a logical share . Guess it comes down to what definition takes president , logic or the Law .

Paddy Pumpkin
Andalucia.com Amigo
Posts: 66
Joined: Mon May 01, 2017 12:06 pm
Location: Madrid

Re: Inheritance tax allowance increase in 2018

Postby Paddy Pumpkin » Mon Oct 30, 2017 10:19 am

Very valid points and it something I considered....but then you could have to pay wealth tax twice and at a marginal higher rate. There are a few forms of ownership outside Spain that don't fit into the law here....or do fit in to the Spanish system but not in a way the authorities intended. Leaseholds and life interests have their valuation reduced depending on the age of the leaseholder. So owning a UK property on leasehold and being of pension age in Spain will see you property valued at about 30% of it's Spanish valuation ( purchase price)......just don't ever sell it as then you will be murdered with CGT.


Return to “You & the Law in Spain”

Who is online

Users browsing this forum: No registered users and 5 guests