NOW & THEN
Reducing the size of your estate while you are still alive is not as straightforward as it sounds
FEBRUARY 20
1452: The Earl of Douglas was murdered by James II.
1472: Orkney and Shetland were annexed to the crown of Scotland as security for the dowry of Princess Margaret, daughter of Christian I, King of Norway and Denmark, and wife of James III of Scotland.
1547: The coronation of nineyear-old King Edward VI (son of Henry VIII and Jane Seymour) took place in Westminster Abbey. He died of consumption at 15.
1570: Lord Hunsdon defeated Leonard Dacre’s rebel army, ending Northern Rebellion in England.
1928: Britain recognised independence of Trans-jordan. 1938: Anthony Eden resigned as Foreign Secretary, refusing to support prime minister Neville Chamberlain’s appeasement policy on Germany.
1947: Lord Louis Mountbatten was appointed the last Viceroy of India, the same day London announced that the British would leave India by June 1948. 1952: Britain’s first Olympic skating medal was won in Oslo by Jeanette Altwegg, who took ladies’ figure title.
1962: Astronaut Colonel John Glenn became the first American in orbit when he circled the Earth three times in the Mercury capsule Friendship 7. The journey took nearly five hours. 1968: MPS passed a bill to raise National Insurance contributions and end free secondary school milk.
1975: Greek Cypriot government called on United Nations to fix deadline for withdrawal of 40,000 Turkish troops from that island.
1979: Poisonous fumes from Java volcano killed 175.
1988: Rainstorm triggered floods and mudslides in Rio de Janeiro that killed 65 people and left up to 100 elderly hospital patients missing and feared dead.
1990: Despite protests from other members of the European Community, Britain announced it would unilaterally lift ban on new investments in South Africa. 1990: Whyte & Mackay distillers was sold to the United States for £160 million.
1991: Slovenia’s legislators voted overwhelmingly to initiate secession from Yugoslavia. 1992: Hoover announced further job cuts at its Cambuslang plant in Glasgow. Unions were told 162 of the 1,150 remaining
workers would have to go. 1993: South African president FW de Klerk named first nonwhite Cabinet ministers.
1995: Indie band Blur won a record four categories, including best British group and best album, at the Brit Awards. 2005: Spain became the first country to vote in a referendum on ratification of the proposed Constitution of the European Union, passing it by a substantial margin, but on a low turnout. 2009: Two Tamil Tigers aircraft packed with C4 explosives enroute to the national airforce headquarters were shot down by the Sri Lankan military before reaching their target, in a kamikaze-style attack.
2010: In Madeira Island, Portugal, heavy rain caused floods and mudslides, resulting in more than 40 deaths, in worst disaster in history of the archipelago.
BIRTHDAYS
BRENDA BLETHYN OBE British actress, 75
Lauren Ambrose, American actress (Six Feet Under),
43; Gordon Brown, former prime minister, 70; Ian Brown, rock singer (Stone Roses), 58; Cindy Crawford, model, 55; Jimmy Greaves, English footballer and television pundit, 81; Patty Hearst, American heiress, 67; Mike Leigh OBE, British dramatist and director, 78; Jennifer O’neill, American actress, 73; Sir Sidney Poitier KBE, actor, 94; Rihanna, singer, 33; Peter Strauss, American actor, 74; Imogen Stubbs, Lady Nunn, British actress, 60; James Wilby, British actor, 63; Barry Wordsworth, British conductor, 73.
ANNIVERSARIES
Births: 1784 Adam Black, Edinburgh-born publisher 1925 Robert Altman, US film director; 1929 Bill Walker, deputy chairman of SNP, MP 1979-97; 1950 Tony Wilson, record producer, TV presenter and journalist. Deaths: 1855 Joseph Hume, social reformer; 1920 Robert Peary, first man to reach the North Pole; 1960 Leonard Woolley, archaeologist; 1961 Percy Grainger, Australian-born composer and pianist; 1966 Chester W Nimitz, admiral;1995 Robert Bolt, playwright and screenwriter.
QAI am in the process of buying a flat for my son. It costs £95,000 and I am providing £85,000. The flat will be part of his inheritance. I have three other children who know about this arrangement and are prepared to wait for their share until the appropriate time. I am 73 years old. Can you please advise me of any pitfalls in this arrangement? I am assuming that your son is going to be the only named owner of the property, and that you will not be joint owners of the flat. Effectively, then, you are gifting him £85,000 at the point of completion.
The main issue you need to be aware of is inheritance tax. Each individual can give away £325,000 free of inheritance tax – or, if your estate includes your main property and is being inherited by ‘direct descendants’ (ie children and grandchildren), £500,000. Anything above this amount will be taxed at 40 per cent.
If your estate – all of the assets you own – exceeds these thresholds, you can reduce it by giving money or assets away while you’re alive, softening a potential inheritance tax blow for your heirs.
Some gifts can be made without inheritance tax being an issue. Gifts between you and your spouse or civil partner are always tax-free. You can give away £3,000 a year, and an unlimited number of £250 gifts (so long as they are going to different people and not the same recipient of your £3,000
gift allowance). You can also give money to children and grandchildren for weddings – £5,000 for your children and £2,500 for grandchildren.
Anything above these amounts could potentially be liable to inheritance tax. They are classed as ‘potentially exempt transfers’. If you survive for seven years after making the gift, no inheritance tax is due. However, if you die
within this time, the gift will be considered part of your estate.
A potentially exempt transfer is applied to your inheritance tax allowance of £325,000 before all of your other assets are totted up. This means that if you gift your son £85,000 and die the following week, your son won’t have to pay inheritance tax on that gift, but your other children will only have £240,000 worth of
inheritance tax-free allowance (or ‘nil-rate band’) to use when they inherit the remainder of your estate. If it exceeds this amount, they may have to pay tax on the excess.
The longer you survive into the seven-year period after you’ve given a gift, the lower the inheritance tax payable If you die three to four years after giving the gift, the tax is reduced by 20 per cent,
between four and five years, it reduces by 40 per cent; between five and six years, it reduces by 60 per cent; and between six and seven years, it reduces by 80 per cent.
None of us have a crystal ball. The Office for National Statistics says that you have a life expectancy of 88, and a one in four chance of living to 94. So there is hope, should you have good health, that there won’t
be any inheritance tax issues for you to worry about.
But I would strongly suggest that you explain exactly what you’re doing with your other children, and perhaps consider adapting your will to reflect the new agreement with your son, and what that means for your inheritance plans for the rest of your family.
Scotland’s growing rural tourism sector breathed a sigh of relief this week when it was announced that legislation requiring the licensing of short-term lets – including farm cottage holiday accommodation – was being withdrawn from the Scottish Parliament, to allow time for a fuller review of the proposals.
With agritourism businesses playing an increasingly important role in both farm and rural economies, the proposals – which were primarilyaimedataddressingtheanti-socialbehaviour encounteredinsomecities– would have introduced significant additional costs for those with rural and tourist accommodation businesses.
And with livelihoods of many in the sector already suffering due to the Covid crisis, a meeting between the Scottish Government and stakeholders was this week told that the imposition of licence fees as high as £1,000 a year, along with additionalplanningrequirements and red tape, were “completely disproportionate” for such enterprises.
Welcoming the pledge to postpone any new regulation until after the May election, Scottish Land and
Estate’s Gavin Mowat, said the proposals had not been well targeted: “All forms of accommodation such as self-catering cottages,b&bs,woodenlodges, yurtsandglampingpodswould have been included in a licensing regime that’s origins lay in a desire to tackle anti-social behaviour and a lack of available housing in primarily urban areas like Edinburgh.”
Caroline Millar, Scotland’s Agritourism lead added: “Although the proposals have not been dropped, the delay until June does signify that there is multi-party feeling that thislegislationwillhaveasignificant negative impact on tourism, not just the self-catering and B&B sector.”
NFU Scotland vice-president, Robin Traquair said that lobbying had flagged up the serious concerns over the rushed natureoftheproposalsandlack ofinformationoftheimpacton many agritourism businesses already suffering due to Covid-19.
Welcomingthechangeoftack, Traquair said: “Farm diversification into short term lets such as bed and breakfast and self-catering accommodationisasignificantsourceof income for many farms in Scotland.
“They have already been dealt a significant blow by the impacts of Covid-19 and these ill thought out and rushed proposals could not have come at a worse time.”
He said that farm businesses operating accommodation would breathe a sigh of relief that there was now time for more appropriate guidance to be developed and for fuller discussions on the issue.
However it wasn’t all good news for the sector – with the revelation this week by First Minister Nicola Sturgeon that tourism and hospitality would be closed for Easter and “may” open for summer representing a significant blow to the whole industry. “The agritourism sector had been hoping for an Easter opening for accommodation but also a range of paid lambing experiences to bring in vital cash,” said Millar.
She said that cash flow for manybusinesseswhichhad been forced to keep their doors closed to visitors had become a significant issue for many – and said that in many cases it was only the agritourismsidewhichkept farms going.
Network Rail has awarded consultancy firm Mott Macdonald a £900,000 contract to take forward designs for the transformation of Edinburgh Waverley station.
The firm will work on concepts developed as part of a masterplan to improve the station to take account of expected passenger growth and support the city’s economy.
The designs for transforming the capital’s main station were revealed in August and include features such as a new mezzanine level that will provide
better access, improved entrances, increased concourse space for passengers and extended platforms.
Alex Hynes, managing director of Scotland’s Railway which includes Scotrail and Network Rail Scotland, said: “Designing a station that works for the city, both now and in the future, is an important step to creating a modern, vibrant transport hub that will attract people to the railway and provide a distinctive and fitting gateway for people arriving into Edinburgh.”