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bigduckontax
bigduckontax, Accountant
Category: Tax
Satisfied Customers: 4198
Experience:  FCCA FCMA CGMA ACIS
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1. Are funeral/cremation costs of the deceased and the legal

Resolved Question:

1. Are funeral/cremation costs of the deceased and the legal costs of preparing the IHT return allowable as a deduction from the value of an estate prior to IHT calculation?
2. Is the value of freehold premises owned 100% by a deceased IHT payer and which is leased to a private trading company in which the IHT payer and spouse have a controlling interest benefit from a percentage deduction of value for his/her Estate's IHT valuation for the purpose of IHT on death? If so what percentage?
3. Where the IHT payer and/or spouse's proportion of the ownership of the freehold property is held with others, either family or non related parties, and the property is leased to a trading company as in (1) above, is the percentage of the value held in the property held in the deceased's/spouses Estate entitled to the same relief as in (2) above?
4. If (3) above applies but the property is held in an LLP containing several freehold property assets but where the deceased/spouse's interest in the particular property is a defined proportion and not a general proportion of the assets of the LLP, does the proportionate value of the property qualify for relief as in (2) above?
Submitted: 1 year ago.
Category: Tax
Expert:  bigduckontax replied 1 year ago.

Hello, I am Keith, one of the experts on Just Answer, and pleased to be able to help you with your question.

1. Yes.

2. The value of the premises would be assessed and aggregated with his other assets for the calculation of IHT. IF the property is bequeathed to his wife or to a charity then it is outside the scope of IHT.

3. The percentage of the property owned by the deceased would be included in his IHT computation. See the note regarding spouse/charity in 2 above.

4. Yes.

I do hope that you have found my reply of assistance.

bigduckontax and other Tax Specialists are ready to help you
Customer: replied 1 year ago.
Thank you for your response but It would appear that I may have not made my questions 2.3 & 4 clear to you.In each case, the properties are let on lease to a limited trading company in which my wife and I jointly hold over 50% of the shares (and the remaining shares are held in our family). In Q2, I own 100% of the freehold reversion. In Q3, I own 50% of the freehold reversion (the balance being owned by a non-related party). In Q4 I own a varying smaller percentage ( between 14.6% and 34%) of the freehold reversion but my interest combined with others (all non-related) are held in an LLP and not in a traditional partnership.Whereas I appreciate that my freehold reversionary interests will be valued as a proportion of the whole value of each property, subject to the usual deduction of 10% where there is joint ownership, my concern is whether the proportionate value of my reversionary freehold interests qualify for an additional element of relief for IHT purposes as the premises are leased to our trading company and occupied by it ? I am given to understand that the proportionate valuations will qualify for an initial 50% relief because the premises are leased to our trading company (where the value of the shares will qualify for 100% relief. Am I correct with my assumptions ?
Regards Alan
Expert:  bigduckontax replied 1 year ago.

The shares you hold in the limited company and your share of the LLP will be included in your estate for IHT purposes. However, the valuation thereof will be a complex and expensive exercise and gobble up the estate's funds to the detriment of the beneficiaries. I would be inclined to simplify the current structure whilst you still have time on your side. Anti avoidance legislation has largely nullified the 'leasehold carve up' as this practice was known. You would be well advised to take trusted, local professional advice regarding your situation which, on the face of it, appears over complicated.

Thank you for your suppert.