For many retired people, Inheritance Tax planning is not a major objective. Very surprising when you consider that the Treasury, in 2008, took over£4 billion pounds in a tax which is often known as a “ voluntary tax”.
Why do people put off Inheritance Tax (IHT) planning? According to unbiased.co.uk 74% of people were not told about it !
Usually the single largest asset is the family home- and there are few simple, uncomplicated cheap ways of ensuring it can be eliminated from the estate. Equity release can form one effective method of Inheritance Tax planning, but it is still tainted, in some eyes, with bad experiences of the past, before the regulators stamped out schemes which were subsequently proven to have big potential drawbacks.
Many people start their Inheritance Tax planning process by taking out life assurance to cover any liability, but of course, this does depend on the costs involved, which are directly related to the assurability of the elderly client. Age and ill health would therefore make it unaffordable.
The political impact on Inheritance Tax planning has also meant that action has been put on the back burner- but since the credit crunch will be felt for many years, any raising of the bar on IHT allowances seem now to be very optimistic. IHT is the easiest tax to collect because estates are not distributed until after probate is granted, at which time, a liability is paid over to HMG.
One of the most common myths of investments is the statement that Individual Savings Accounts (ISA’s) are tax efficient. They are very Income Tax and Capital Gains Tax efficient, but are totally ineffective as far as Inheritance Tax planning is concerned. With clients having accumulated significant funds with ISA’s and their predecessor PEP’s. Reviewing the alternatives is a quite simple process of eliminating the 40% tax charge which would be take from it.
The starting point is the review ( or making!) of the family will. This will ensure that for a couple, both nil rate band allowances are utilized to maximum advantage, and that estates go to the people intended. The most recent celebrity example of this is Peter Sellers. His estate has now gone almost exclusively to the two children of one of his divorced wives- no direct blood relatives. His own children received very small bequests because his will was not set up to reflect his latter day circumstances.
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www.taxcpahouston.com Tax Planning & Tax accounting tips for general contractors by Houston Tax CPA Jim Trippon. Trippon & Co. CPAs have over 25 plus years of experience in tax preparation and tax accounting for construcstion contractors of all types. This weeks tip is on how to use little known tax deductions to save on tax. You see most businesses (and industries) have special tax deductions that can save serious money. The key is to work with a CPA who looks for every opportunity to legally save you tax. This week we look at deductions for construction contractors. For years I have worked with all types of construction contractors.everything from general contractors, to roofers, electricians, commercial plumbers, HVAC and utility contractors. I have found that most construction professionals dont even know that they may qualify for a special deduction save them 6% on their federal income tax every year. What I am talking about is the Domestic Production Activities Deduction (which can be deducted using IRS Form 8903). This special deduction allows many construction contractors to deduct 6% of net income derived from qualified production activities. There are some limitations, but most construction contractors that do new construction projects can qualify. If you would like to work with a CPA firm that understands the construction industry and will work hard to make sure you do not pay a penny more than you owe give us a call at 713-661-1040. At Trippon & Company CPAs …
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