Sir Ken Dodd Gets The Last Laugh On The Taxman
Sir Ken Dodd – God rest his happy soul – was a British institution, a national treasure and this country’s greatest custodian of humour. His collection of treasured jokes is legendary.
Knotty Ash’s greatest son also knew a thing or two about minimising his tax liability…much to the chagrin of the then Inland Revenue – now Her Majesty’s Revenue & Customs (HMRC) – back in 1989.
So it came as no surprise to our wills and probate solicitors that Sir Ken had the last laugh on the taxman by marrying his partner Lady Anne just two days before he died.
In doing so, Sir Ken may have saved his estate from having to pay 40 per cent Inheritance Tax (IHT) above the first £325,000.
Spouses pay no Inheritance Tax. Not a penny. So Sir Ken could pass on his entire estate to Lady Anne with no liability whatsoever.
And there’s more…
When Lady Anne passes away, her estate would receive the following tax reliefs (provided that Sir Ken left his estate to her):
- no IHT on the first £325,000
- no IHT on the next £325,000 (Sir Ken’s relief would pass to her if it were not used when he died)
- no IHT on the next £125,000 (rising to £150,000 in 2019/2020, £175,000 in 2020/21) if there were a property in the estate
- no IHT on the next £125,000/£150,000/£175,000 (if Sir Ken didn’t use that relief either).
So that’s up to £1 million that could be free from 40 per cent IHT when Lady Anne dies.
But HMRC could claw back some reliefs if the estate were over £2 million. So Lady Anne could simply follow in the footsteps of Sir Ken by remarrying and passing all her estate to a new spouse – tax free.
All these ways of reducing one’s IHT liability are not some crafty scheme dreamed up in some offshore tax haven. They are HMRC’s own rules. They’re quoted by the Chancellor in his Budget speech virtually every year.
So you’re quite within your rights to plan your estate around them. You can do so with a clear conscience. These government tax rules are enshrined in law for the benefit of you and your loved ones.
And there are plenty more rules like this that can help you. So it pays to take a bit of expert advice from our wills and probate solicitors. Think about how careful planning or a trust could reduce your potential tax bill.
For more information, contact Coles Miller Senior Lawyer Graham Lawrence, a specialist in wills, estate administration and Inheritance Tax, 01202 355695.