SDLT supplement, Employment Allowance, IHT planning

Tax rules which have simple cut-off thresholds can become complex when tested at the limits, as two examples relating to SDLT and the Employment Allowance illustrate. We also had a reason to thank Prime Minister David Cameron last week, for drawing attention to some key aspects of inheritance tax planning.

This is an extract from our topical tax tips newsletter dated 14 April 2016 (5 days before we publish an extract on this blog). You can obtain future issues by registering here>>>

IHT planning 
I was a bad week for David Cameron. On his first day back in the House of Commons he was forced to explain his family's tax affairs, including some inheritance tax planning under which he received two large gifts from his mother totalling £200,000. 
  
There was extensive coverage of this issue, with many newspapers citing the £80,000 IHT apparently “saved”. Of-course the IHT is only avoided if the donor survives for seven years after the date of the gift, but the fuss may well have prompted your clients to think about making gifts to the younger generation.    
  
This gives you a good opportunity to bring up the topic of IHT planning with your clients, as if it's OK for the PM to do (and he solidly defended the move), it should be good enough for them. 
  
Many older people are afraid of giving away money which may be needed to fund care in their last years. This is understandable, but you can help put their minds at rest by working through some cash-flow forecasts using various estimates of future cash needs and life expectancies. 
  
There are some key changes to IHT exemptions for the family home which will apply to deaths on or after 6 April 2017 onwards (Finance Bill 2016, s 82, Sch 15). The property needs to pass on death to a direct descendent of the owner for the exemption to apply. So the Will must be clear about who is to receive specific properties in the estate. Step children and adopted children are treated as direct descendants for this purpose, but nieces and nephews are not. 
  
Opening a conversation about planning for tax due after a death is never easy, but David Cameron has provided an ideal excuse - use it.


This is an extract from our topical tax tips newsletter dated 14 April 2016 (5 days before we publish an extract on this blog). You can obtain future issues by registering here>>>
 
The full newsletter contained links to related source material for this story and the other two topical, timely and commercial tax tips. We've been publishing this newsletter weekly since 2007; it's clearly written and focused on precisely what accountants in general practice need to know about each week. You can obtain future issues by registering here>>>