Veteran TV presenter Bruce Forsyth has criticised the level of inheritance tax currently payable under English law.
The light entertainment stalwart, now 86, told the Radio Times that he resented how much of his sizeable estate will be lost to tax when he passes away.
“I think your inheritance should go to your children more than back to the country that you’ve lived in,” he said. “I’m not saying you don’t owe the country something, of course you owe your country a lot for living there all those years. But I think it can be a bit over the top.’
Forsyth presented popular variety show Strictly Come Dancing for 10 years, but his television career dates all the way back to the 1930s. He has six children – five daughters and one son – by three different marriages, along with nine grandchildren and three great-grandchildren.
After his decades on the nation’s television screens, the presenter’s company is thought to now be worth around £5.7 million, while his home is worth around £4 million the Mail reports.
In many ways, Bruce Forsyth’s large family represents a new social norm. He has all those children from different marriages to think of and provide for and he wants to ensure they receive some benefit, but he also feels strongly that too great a chunk of his wealth will go back to the government in tax.
Inheritance Tax (IHT) is currently charged at 40 per cent on the estate of deceased individuals. It is paid on chargeable assets exceeding the so-called ‘nil rate’ band – the amount below which IHT is not payable: currently £325,000. There are also certain reliefs and exemptions that can be applied to minimise IHT. For example, an exemption applies when gifts on death are made between spouses or civil partners domiciled (resident for legal purposes) in the UK.
On the death of the surviving spouse any IHT liability will then be calculated by reference to the remaining assets. It is worth noting that the IHT nil rate band is a ‘transferable allowance’ between spouses and registered civil partners. This means that if the deceased spouse’s estate did not use up any of his/her nil rate band when they died, the survivor will have two full nil rate bands to offset against the value of their own estate on their death.
Such double allowances can mean that up to £650,000 (as of the current financial year) is exempt from tax, and in certain circumstances this exemption rate can increased still further to capture the nil rate band from a previous marriage where the individual was widowed. Specialist advice, preferably from a member of STEP (the Society of Trust and Estate Practitioners), is advisable to take full advantage of the tax relief available in each case.
A carefully crafted will can ensure that all available reliefs are fully utilised, thereby minimising the amount of inheritance tax that must be paid on the person’s estate. Certain business interests, for example, qualify for a relief against IHT called Business Property Relief (BPR). This can be very valuable for business owners who wish to pass assets through to their children in the long run .
The use of a trust within a will can ensure that all parties’ interests are catered for in a managed and tax-efficient way. Putting a trust in a will can be a good way to benefit more than one person over a period of time whilst maximising the exemptions available, such as the spouse exemption and BPR. A trust can also ensure, for example, that the rights of a surviving spouse are protected during their lifetime whilst ultimately also providing some ring-fencing of assets for the children as ultimate beneficiaries. Often such children come from different marriages or relationships and so a carefully crafted ‘letter of wishes’ accompanying the will is vital in order to ensure clarity.
It is worth noting that children are increasingly turning to litigation where they have, by dint of fortune, been left without any inheritance. Government figures show that between 2008 and 2013, there was a 700 per increase in the number of High Court actions challenging wills. But with specialist legal advice, it is possible to avoid such acrimonious family disputes altogether.
Read more about STEP here.
Photo by Martin Deutsch via Flickr