Who can apply under the 1975 Act?

Who can apply under the 1975 Act?

By | Inheritance Tax | No Comments

Whilst any person has testamentary freedom to leave their estate however they see fit, they should be aware that their freedom is slightly restricted by the Inheritance (Provision for Family and Dependants) Act 1975 (the 1975 Act). The 1975 Act gives the court powers to order financial provision from a deceased’s estate to benefit certain applicants. S1 of the Act covers who can apply to the court based on a lack of reasonable provision. Spouse/civil partner The surviving spouse/civil partner of the deceased (including a judicially separated spouse). Former spouse A former spouse/civil partner who has not yet remarried or formed a new Civil Partnership (noting that their divorce/dissolution may restrict the ability to apply under the 1975 Act). Cohabitant A person who lived with the deceased for period of at least two years ending immediately before the date when the deceased died and they lived as if they were…

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Survivorship Clauses and Commorientes

By | Inheritance Tax | No Comments

Survivorship clauses between spouses will often include provisions so that the survivorship period will not apply if they both die in circumstances where it is uncertain who survived the other, for example in a plane crash. The reasons for this inclusion is a very specific inheritance tax advantage where spouses die together, and it cannot be determined which of them died first. In succession law, it is impossible for two people to die at the same time. Instead, S184 Law of Property Act 1925 provides that where the order of deaths are uncertain, a younger person is presumed to have survived an elder person. This is known as the Commorientes rule. This presumption applies to gifts by Will and assets passing by survivorship under a Joint Tenancy. It does not apply to assets passing by intestacy. For the purposes of calculating inheritance tax however, it is possible for people to…

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Inheritance Tax Review – An Update

By | Inheritance Tax | No Comments

Potentially changing the Inheritance Tax regime is big news at the moment and the past few weeks have provided some interesting developments. As mentioned in a previous article, the Chancellor of the Exchequer has requested that the Office for Tax Simplification carry out a review of the Inheritance Tax regime. Soon after this, the Office of Tax Simplification provided a scoping document for the review. On 27th April, the Office for Tax Simplification provided their call for evidence. This call comprises of two parts. Firstly, there is an online survey aimed at the public directly to access the public’s practical experience or understanding of Inheritance Tax. Secondly, the Office for Tax Simplification has also provided a set of consultation questions aimed at the public, professionals and business owners. These questions cover areas such as: Difficulties in completing IHT Forms Difficulties in administering an estate and completing probate Interacting between lifetime…

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Inheritance Tax Exemptions and Allowances

By | Gifting, Inheritance Tax | One Comment

Where clients are wishing to reduce their potential inheritance tax liability, there are lifetime inheritance tax exemptions and allowances they should be made aware of. For a number of these, they may need to seek regular advice from tax specialists to ensure that they will qualify for an exception or do not exceed an allowance. Annual Exemption Each person has an annual exemption of £3000 per year that can be gifted in any way that will not be considered for inheritance tax purposes. If the full £3000 is not used fully in that year, any unused allowance may be rolled over to the next year once. Small Gift Exemption Small gifts of £250 or less are exempt from inheritance tax. A person can make as many of these gifts as they like each tax year as long as the total amount gifted to each individual is less than £250. This…

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Review of Inheritance Tax

Chancellor requests a review of Inheritance Tax

By | Inheritance Tax | One Comment

In a letter published on the 31st January, the Chancellor of the Exchequer has requested that the Office for Tax Simplification carry out a review of the inheritance tax regime. The Chancellor has acknowledged that the inheritance tax system is complex and wished for simplification to ensure that the system is fit for purposes and operates as smoothly as possible. It is requested that the review considers: Technical and administrative issues, such as the process of submitting returns and paying any tax due Practical issues around routine estate planning and disclosure How current gift rules interact with the wider inheritance tax system and whether the current system causes distortions when making decisions about transfers, investments and other transactions. A document covering the scope of the review will be agreed and published by the Office for Tax Simplification in due course. This request for a review comes less than a year…

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