Inheritance Tax toolkit for buy-to-let landlords – Part Two

Chris Street

29th July 2017

By Louise Misiewicz

Are you up-to-date with current IHT legislationin the UK?

What advice is available for property investors on IHT?

Last week, I wrote the first part in a series of blog articles offering an Inheritance Tax Toolkit for our buy-to-let landlord property investment blog readers, following a meeting with a new property investor client to discuss our Wealth Planning Review service.

The first part of the Inheritance Tax Toolkit blog series can be read in full here, and this week I’m going to highlight a full checklist of questions to be considered when looking at inheritance tax legislation.

Is the checklist of IHT questions for investors compulsory?

The checklist of questions I’ve put together isn’t compulsory for buy-to-let landlords, but it will certainly help to clarify the main considerations that property investors need to think about in line with IHT.

One of the most important things to get to grips with then it comes to getting the right level of IHT liability in place is to gather information, to ensure that you are paying the right amount of inheritance tax.

I advised my buy-to-let landlord client to collate information in a straightforward, accessible manner by answering the following general questions on a checklist:

  • Has sufficient time been given to research and prepare the IHT400 form?
  • Have the Will and associated documents been reviewed, with copies enclosed with the IHT400 form?
  • Has the deceased’s paperwork relating to assets and liabilities been checked?
  • Have any overseas assets or Trusts belonging to the deceased been taken into consideration?
  • Have family and business associates been advised, and do they understand what’s happening?
  • Are there any disputes or court actions affecting the estates?
  • Does the deceased have a deceased spouse or civil partner who died before them?
  • Has the domicile of the deceased and surviving spouse or civil partner been found?

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The next series of checklist questions for property investors to consider around inheritance tax includes the following, which I gave to my buy-to-let landlord client to add to his Inheritance Tax Toolkit:

  • Have all assets that the deceased held jointly been identified?
  • Have all assets due to the deceased from someone else’s estate which haven’t been received by the deceased from someone else’s estate in the last five years?

Considering the assets is a critical part of ascertaining the IHT liability of a property investor client.


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What else does a property investor need to consider?

The next series of questions presented to my property investor client around the area of IHT included the following considerations, and were an essential and helpful part of the Inheritance Tax Toolkit:

  • Have all Gifts or other transfers of value made within seven years of the date of death been identified?
  • Have any Gifts with reservation of benefit been considered?
  • Has evidence been collated to substantiate any claims for debts owed by the deceased?

There are other areas to consider around IHT liability, including pensions – such as:

  • Have all pension lump sum death benefits been included in form IHT409?
  • Have the deceased’s pension arrangements been checked to establish any changes in the two years before death?
  • Has the correct valuation of any life insurance policy included in the estate been checked?
  • Have the terms and ownership of any join life policies been established and confirmed?
  • Did the deceased have any interest in a Trust set up by someone else?

Valuations are another critical area for examination when it comes to establishing IHT liability, and I asked my landlord client the following questions as part of the IHT Toolkit checklist:

  • Has the open market valuation been obtained and used for each asset belonging to the deceased?
  • Have the valuations of any Trust assets been obtained, and do they incude details of any income yet to be paid?
  • Has the IHT400 form and all accompanying schedules been checked for accuracy?
These questions form an important part of understanding and evaluating the IHT liability on a deceased person’s estate, and the landlord client found the simple but thorough checklist really helpful.
I have written a number of useful articles for property investors around IHT, including:

IHT – getting the basics in place

Transferring your main home into a Trust

Discretionary Trusts

Who manages your estate?

Next week, I’ll examine Part Three of the inheritance tax toolkit for buy-to-let landlords, and will be providing blog readers with advice on risk and mitigation factors to consider around inheritance tax.

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