Originally posted by webberg
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Edge EBT thread
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Originally posted by jbeer View PostNot sure I follow ? Section 72 applies (specifically 72(2)(c) on loan write off regardless of whether the loans are worth less than they were, i.e. its the write off that is caught by this section (and as you say the nil rate band does not apply) If the loans are not written off until after death then surely there is a chance of "deferral until death" ? - which could possibly mean your children getting hit with a big tax bill.
As an example of the fall in value, let's pretend I walk down the road and see someone I don't recognise. I say "do you want to borrow £100 interest-free for as long as you like? Just give me your name and address and I'm not really bothered if you can afford to repay it or what you spend it on". She grabs my money, writes her name and address on a scrap of paper and gives it to me. I don't have my £100 any more but I do have the right to receive that £100. Now how much would you be prepared to pay me for the right to receive the £100 from her? Let's say you like a gamble and will give me £1. That's a £99 loss in value.Comment
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Originally posted by Iliketax View PostMy understanding is that s72(2)(c) applies where there is a reduction in the value of property held by the trust otherwise than by means of a payment. So if a £100 loan still had a £100 value then the tax charge would arise when the loan is written off. But if the value of the receivable fell when the loan was made, that would be the time of the tax charge.Comment
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Originally posted by KRAMB View PostIf IHT is a valid concern then it could become more of a problem than the Income Tax HMRC state is owed.
If it would be possible to defer the IHT payment until Death then this would probably have the effect of reducing any estate remaining - solution for some ?
That's a lot of tax accruing at 1% tax per Year until write-off including Interest if payment due dates are applicable and not met. So, it would be best trying to wrestle this issue now before amounts become astronomical
I am uncertain on the subject - if HMRC lost / dropped their case against the Edge arrangement then would each Member still be liable for IHT as the scheme used a Trust. - the longer it takes for HMRC to challenge the Edge scheme the more IHT that becomes dueComment
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Originally posted by jbeer View PostThis is definitely a valid concern. These loans run for 80 years but if you die the loan write off is triggered and the charge will be deducted from your estate. Unless you don't care about this then the sooner the loans are written off the better. The bill is increasing with each passing month. As you say, unless this is dealt with, the bill could be much worse than the income tax due.Comment
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IHT
It appears that IHT will be applied at some point whether its under s86 or s72.
S86 will be triggered when one dies (regardless of winning the case or not).
Just not sure how it will be calculated, will it be: (outstanding loan + assets) - 325K = IHT due on remaining amount.
Under S72, triggered on write-off (as per CLSO in my case).
So in the long, it sounds like a better option to write-off these loans now rather than wait for many years where IHT can seriously get huge.
I wonder whether HMRC would accept to only settle the IHT part of the settlement for now if one is interested.
Would really appreciate should someone can shade some light on this matter.Comment
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Are you still in discussions with HMRC about your personal CLSO offer ? The deadline to agree was the 30th September.STRENGTH - "A river cuts through rock not because of its power, but its persistence"Comment
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Originally posted by regron View PostAre you still in discussions with HMRC about your personal CLSO offer ? The deadline to agree was the 30th September.
I was just wondering whether it would be possible to just settle the IHT element (to stop IHT accruing).
For the rest of the tax due, wait for the outcome.Comment
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Originally posted by SimonJones View PostNo!
I was just wondering whether it would be possible to just settle the IHT element (to stop IHT accruing).
For the rest of the tax due, wait for the outcome.STRENGTH - "A river cuts through rock not because of its power, but its persistence"Comment
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