Inheritance Tax (United Kingdom)

In the United Kingdom of Great Britain and Northern Ireland is in and of the death of gratuitous inter vivos Erbwerben an inheritance and gift tax ( Inheritance tax) levied. For donations can also be a capital gains tax ( Capital Gains Tax ) incurred.

Basics

The inheritance tax ( IHT abbreviated in English ) dates back to a 1796 levied in England and Wales estate Expensive ( tax on estates ). It was in 1975 replaced by the Capital Transfer Tax and Inheritance Tax renamed in 1986. It is a directly relating to the estate tax, in the not attack the transferee is taxed, so it basically does not depend on the personal circumstances of the heir. This also follows from the Anglo-Saxon understanding of the estate as a private limited legal capacity of assets. The tax is levied in limited form on donations. From her only about 6 % of all estate transactions are recorded and the revenue accounts for about 0.8 % of the total tax revenue of the United Kingdom from.

Personal tax liability

The global estate of a person in the UK is controlled (unlimited tax liability ) when the decedent domiciled in the United Kingdom ( Domicile ) or has a domicile for inheritance tax purposes is fictitious.

With the birth of an illegitimate child acquires his father's home. An illegitimate child acquires his mother's home. The Ursprungsdomzil ( domicile of origin ) will persist until the acquisition of a new domicile. A choice of domicile ( domicile of choice ) is justified by the fact that the person with the will take to remain permanently resident in a particular jurisdiction there. The residence is so true importance in the determination of the location, but he is not the sole criterion.

For inheritance tax purposes will be deemed a domicile in the UK, if someone has at least 17 years there stopped during the past 20 years as a resident. Taking the deceased abroad, then a home for purposes of inheritance tax but is accepted for three years after his departure

The deceased had no domicile in the UK, only the establishment situated in the United Kingdom wealth is controlled ( limited tax liability ).

Discount

The tax is levied on the estate of the deceased, plus the donations made ​​in the last seven years before his death, including those with respect to which he had the free use continue to be dedicated (such as under German law understanding in usufruct ). In addition Calculated are also some formed by the testator with respect to his death special funds ( special trusts ). The estate is valued according to its market value, tax valuation rules do not apply.

Tax allowance and tax rate

Tax free is the estate with a base amount (called nil - rate band), which is adjusted each year and for 2009 is £ 325,000 (about 360,000 Euros ). The allowance is usually raised with the beginning on 6 April of each year the new tax year. His originally announced for the tax year 2010/11 increasing to £ 350,000 (about 385,000 Euros ) was suspended in view of the general economic development. The exemption applies to the estate, but not to the heirs, no matter how many heirs there. The excess amount is taxed at 40%. On the phylogenetic position of the heirs to the deceased, it does not matter.

For spouses and registered partners whose contributions are mutually anyway exempt from inheritance tax, an upon Erstversterbenden not to transfers to other family members, usually children of unused basic amount (nil band rate) (because the surviving spouse or partner everything is inherited ) so that for the preservation of the family assets maximum of twice the allowance ( 650,000 or £ 700,000 ) can be transferred to the second estate case on the death of the surviving spouse or partner are available.

Special tax concessions

The to spouses and registered partners ( civil partner ) resulting participation in the estate is exempt from tax liability. Where the surviving spouse or registered civil partner is not domiciled in the United Kingdom, it was until 2013 only GBP 55.000, - exempted from the tax. The Finance Act 2013 has been increased pressure from the EU, the tax exemption to the general allowance and also created the possibility to opt for taxation as domiciled.

Certain operating assets such as business corporations, companies in the agriculture and forestry as well as cultural goods can be transferred entirely tax-free. Operating assets can then at a discount of 100 %, that is tax-free, passing over, when the company was owned by the decedent during the last two years before the death. This does not apply to companies that engage in any original commercial activity, such as only asset management companies. During the transfer of publicly traded majority interests ( the control rights convey ), the valuation discount is 50 %.

No more is required, the beneficiary objects that are situated on the territory of the United Kingdom or the Channel Islands or the Isle of Man, were included at the insistence of the European Commission's establishment situated on the territory of a Member State of the European Union or the European Economic Area assets.

Donations

Inter vivos gifts, subject only to the extent of inheritance tax as they were made within seven years before the death of the testator. Outside of this period, they are tax free. Donations to certain special-purpose assets ( trusts ) that are not available in connection with the succession ( they would the estate attributed ) are taxed at 20%. For the estate attributable to donations of the last seven years, of the value of a is made ​​after the time elapsed since the donation of time calculating discount ( after three years with 20 % and then annually -increasing by 10%, up to 80 %, so-called taper relief ).

Method

An inheritance tax declaration, otherwise by the purchaser shall be submitted within six months from the death of the deceased by the representative of the estate ( an executor or administrator ) (as beneficiaries ), they are also responsible for paying the tax.

Capital gains tax

With donations, the capital gains tax can ( Capital Gain Tax) incurred as a gift is treated for tax purposes, income is recognized. The tax is levied on the realized in a real or fictitious sales value growth and is generally attributed to the donor. The profit is taxed at the highest tax rate, with which the taxpayer must pay tax on his income in the same year. In the calculation of capital gains under certain conditions hidden reserves to the recipient can be transferred, then the gift of good will with a lower value in its assets (is it likely from the later with a renewed realization of profits ). As far as legal processes are related to inheritance, there may be exemptions. The capital gains tax are also subject to legal actions between spouses and registered partners. For donations, income is recognized at any rate if the spouse or partner live together, avoided by the overridden assets are stated at cost of acquisition of the donor and the recipient. Certain items (eg own car ) are exempt from capital gains tax. For owner-occupied principal residence a special allowance is granted