Our Tax Associate, Chris Hodgson, discusses the topic of Inheritance Tax in our new blog post…
It was with sadness that I heard of the passing of the comedy legend Ken Dodd.
A part of his life story, which he weaved into his act, was his relationship with HMRC which culminated in a financial settlement. However, in a famous court case at the time, he was acquitted of any criminal offences. He said, “In the 1800s the government introduced Income Tax. At that time it was 2p in the pound. I thought it still was.”
Two days before he died, he married his long term partner who became Lady Anne Dodd.
Ken Dodd may have got the last laugh, because as well as recognising their life together, marriage could also bring a tax benefit. Where a person dies and leaves their assets to their partner, Inheritance Tax is charged on the value of that legacy, subject to the nil rate band of £325,000.
However, if you leave a legacy to your spouse or civil partner, or a trust for that person’s benefit, the legacy qualifies for spouse exemption and passes free of Inheritance Tax.
While I am not privy to the terms of his Will, any legacy left to Lady Anne would be larger and would therefore give her extra financial security. She would also have the opportunity to carry out further planning in her lifetime to reduce the potential liability on her estate.
Using basic tax reliefs can bring you some of the biggest savings. We regularly assist clients in planning ways to pass on as much of their wealth as possible to their loved ones and to the younger generations. It is never too late to get your affairs in order.
If you have any questions regarding Inheritance Tax, please contact Chris Hodgson.