Originally posted by Forsythia
View Post
- Visitors can check out the Forum FAQ by clicking this link. You have to register before you can post: click the REGISTER link above to proceed. To start viewing messages, select the forum that you want to visit from the selection below. View our Forum Privacy Policy.
- Want to receive the latest contracting news and advice straight to your inbox? Sign up to the ContractorUK newsletter here. Every sign up will also be entered into a draw to WIN £100 Amazon vouchers!
Inheritance Tax part of Settlement
Collapse
X
-
Best Forum Adviser & Forum Personality of the Year 2018.
(No, me neither). -
Something new I've seen in the past couple of months - hmrc are now arguing where the s86 trust was setup for the benefit of employees, and if the company is no longer in existence, then the "loans" effectively become property (rather than employee benefits) and the IHT charge crystallised at the point at which the company dissolved.
This means the IHT charge is no longer related to whether the loans are written off or not, and must be paid as part of settlement.Comment
-
Originally posted by RickG View PostSomething new I've seen in the past couple of months - hmrc are now arguing where the s86 trust was setup for the benefit of employees, and if the company is no longer in existence, then the "loans" effectively become property (rather than employee benefits) and the IHT charge crystallised at the point at which the company dissolved.
This means the IHT charge is no longer related to whether the loans are written off or not, and must be paid as part of settlement.
Any additional news come to light in this subject?
I ask as the dreaded HMRC settlement paperwork has just dropped and don't know whether to tick Yes/No to paying the claimed Inheritance Tax.Comment
-
Originally posted by RickG View PostSomething new I've seen in the past couple of months - hmrc are now arguing where the s86 trust was setup for the benefit of employees, and if the company is no longer in existence, then the "loans" effectively become property (rather than employee benefits) and the IHT charge crystallised at the point at which the company dissolved.
This means the IHT charge is no longer related to whether the loans are written off or not, and must be paid as part of settlement.
It would tally with my settlement letter that has increased iht monies owed since the last settlement letter a year ago.Comment
-
Originally posted by Clairol View PostHow have you “seen” this?
It would tally with my settlement letter that has increased iht monies owed since the last settlement letter a year ago.
I’ve trawled through years worth of posts on here for days and countless google searches trying to get a definitive answer but clarity, there is none.
It’s a hybrid of Alice in Wonderland and Kafka.Comment
-
I also just received the latest brown envelope. I had signed the settlement offer last year and sent it back to them (had agreed the IHT + tax etc). Was waiting for their final acceptance letter (in the mean time the trustees released the loans.......HMRC dont know this) which never arrived - upon questioning I found out about the LC review and they were giving people the option to stall settlement pending outcome of review. In January they wrote telling us the outcome and saying they would present all options by end of July (this brown envelope) - they also said 'you will be able to settle on the SAME figures as previously agreed'. So this particular brown envelope.. the normal tax and interest part of the settlement is the same as agreed... but they have bumped they IHT up by 2.5k which I assume is the conitnued build up of the 0.25% per quarter..... surely they cant do that since they said the previously agreed settlement figures were fixed until we had a chance to consider this latest letter?Last edited by bubble99; 12 June 2020, 17:29.Comment
-
Originally posted by bubble99 View PostI also just received the latest brown envelope. I had signed the settlement offer last year and sent it back to them (had agreed the IHT + tax etc). Was waiting for their final acceptance letter (in the mean time the trustees released the loans.......HMRC dont know this) which never arrived - upon questioning I found out about the LC review and they were giving people the option to stall settlement pending outcome of review. In January they wrote telling us the outcome and saying they would present all options by end of July (this brown envelope) - they also said 'you will be able to settle on the SAME figures as previously agreed'. So this particular brown envelope.. the normal tax and interest part of the settlement is the same as agreed... but they have bumped they IHT up by 2.5k which I assume is the conitnued build up of the 0.25% per quarter..... surely they cant do that since they said the previously agreed settlement figures were fixed until we had a chance to consider this latest letter?Comment
-
Can someone please explain how the inheritance tax part works.
So far I've understood that it is levied at 0.25 percent per quarter until the loans are written off. If I settle with IHT included then I have to have loans written off within 30 days (also heard 3 months). If I dont have the loans written off within the stipulated time then they would be recalculated and I could end up paying further IHT. There is also the 10 year aniversary charge, which Im not sure whether it applies in this instance or not. There is also the IHT thresholds, again I dont know whether this applies or not. Does anyone have a complete picture regarding IHT and how it works with regards to loan settlement?Last edited by hudson; 16 June 2020, 16:09.Comment
-
This is an aside and taken from ETCtax's submission to the Finance Bill evidence. It is not saying IHT will not be charged it is an argument as to why IHT shouldn't be charged. For others to comment on whether it is legally arguable.
"Inheritance Tax (‘IHT’) should not be payable on any settlement. Principally, seeking to tax
taxpayers on the basis that these loans are income, i.e. recharacterizing these loans as income
and then also seeking to recover IHT on the same amount, if the loan is written off, is
contradictory and unfair. This charge to IHT is based upon the ‘exit charge’, whereby IHT is
charged upon dispositions from certain settlements. However, Section 65 (5) (b) Inheritance
Tax Act 1984 expressly excludes an exit charge where a payment is made for the purposes of
income tax. Therefore, an IHT charge, where income tax is also payable is unjustifiable and
unfair. "
Full evidence submission here
https://publications.parliament.uk/p.../memo/FB28.pdfComment
-
Originally posted by hudson View PostCan someone please explain how the inheritance tax part works.
So far I've understood that it is levied at 0.25 percent per quarter until the loans are written off. If I settle with IHT included then I have to have loans written off within 30 days (also heard 3 months). If I dont have the loans written off within the stipulated time then they would be recalculated and I could end up paying further IHT. There is also the 10 year aniversary charge, which Im not sure whether it applies in this instance or not. There is also the IHT thresholds, again I dont know whether this applies or not. Does anyone have a complete picture regarding IHT and how it works with regards to loan settlement?Comment
- Home
- News & Features
- First Timers
- IR35 / S660 / BN66
- Employee Benefit Trusts
- Agency Workers Regulations
- MSC Legislation
- Limited Companies
- Dividends
- Umbrella Company
- VAT / Flat Rate VAT
- Job News & Guides
- Money News & Guides
- Guide to Contracts
- Successful Contracting
- Contracting Overseas
- Contractor Calculators
- MVL
- Contractor Expenses
Advertisers
Contractor Services
CUK News
- Streamline Your Retirement with iSIPP: A Solution for Contractor Pensions Sep 1 09:13
- Making the most of pension lump sums: overview for contractors Sep 1 08:36
- Umbrella company tribunal cases are opening up; are your wages subject to unlawful deductions, too? Aug 31 08:38
- Contractors, relabelling 'labour' as 'services' to appear 'fully contracted out' won't dupe IR35 inspectors Aug 31 08:30
- How often does HMRC check tax returns? Aug 30 08:27
- Work-life balance as an IT contractor: 5 top tips from a tech recruiter Aug 30 08:20
- Autumn Statement 2023 tipped to prioritise mental health, in a boost for UK workplaces Aug 29 08:33
- Final reminder for contractors to respond to the umbrella consultation (closing today) Aug 29 08:09
- Top 5 most in demand cyber security contract roles Aug 25 08:38
- Changes to the right to request flexible working are incoming, but how will contractors be affected? Aug 24 08:25
Comment