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bigduckontax
bigduckontax, Accountant
Category: Tax
Satisfied Customers: 4203
Experience:  FCCA FCMA CGMA ACIS
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15 years ago my partner and I bought a house in Stoke Newington.

Customer Question

15 years ago my partner and I bought a house in Stoke Newington. We have never been married. We have one son aged 24. In 2006 we signed a legal document to become 'tenants in common', 50% belonging to each of us. My partner and I then separated and he moved out about four years ago. I have been living in the house ever since. We know that a married couple can now leave one million pounds to their children tax free. We would like to know how much inheritance tax we would be liable to pay, should one or both of us die. Can you suggest what steps we could take to reduce our tax liability?
Submitted: 2 years ago.
Category: Tax
Expert:  bigduckontax replied 2 years ago.
Hello, I am Keith, one of the experts on Just Answer, and pleased to be able to assist you with your question. On decease all assets are aggregated and subject to Inheritance Tax (IT). Here is the advice from The Telegraph: 'If you own a property worth up to £1m you will be able to leave it to children or grandchildren completely free of inheritance tax from April 2020.Chancellor George Osborne announced today that he will raise the inheritance tax (IHT) threshold from £325,000 per person to £500,000.' Any assets over these limits will be taxed at a 40% flat rate Inheritance Tax. The limits are inflated by any inter spousal or charitable bequests, but unmarried partners do not enjoy this inter spousal dispensation. You can give away assets, but you create an Potentially Exempt Transfer (PET) for IT purposes. PETs run off over seven years at a taper and in the event of the donor's decease within this period the PET is added back to their estate and is the first to suffer IT. If the estate is insufficient to pay the tax it cascades down to the beneficiary for immediate payment. To protect your assets in this case a reducing term life insurance police might be of assistance. I do hope I have shed some light on your position.
Expert:  bigduckontax replied 2 years ago.
Amendment; penultimate paragraph; delete 'police,' insert 'policy.'