Ken has last laugh on his tax af­fairs as he mar­ries

Birmingham Post - - PERSONAL FINANCE - Vicky Shaw Spe­cial Cor­re­spon­dent

SIR Ken Dodd died this week just two days af­ter mar­ry­ing Anne, his part­ner of 40 years. It was a smart move for a man who had one or two run-ins with tax au­thor­i­ties over the years.

Ex­perts said that, in gen­eral, a per­son’s mar­i­tal sta­tus can make an enor­mous dif­fer­ence when it comes to in­her­i­tance tax bills.

As­sets can be passed be­tween mar­ried cou­ples free of in­her­i­tance tax.

Sarah Coles, a per­sonal fi­nance an­a­lyst at Har­g­reaves Lans­down, said: “In ad­di­tion to the enor­mous emo­tional res­o­nance a wed­ding car­ries, there are also tremen­dous dif­fer­ences be­tween the ways that a part­ner and a spouse are treated when it comes to in­her­i­tance tax.

“As­sets can be passed be­tween spouses free of in­her­i­tance tax, which can make an enor­mous dif­fer­ence to the tax due.”

She said the nil rate band for in­her­i­tance tax is cur­rently £325,000, while home own­ers have a res­i­dence nil rate band at £100,000.

Ms Coles con­tin­ued: “For un­mar­ried cou­ples, when one dies and leaves ev­ery­thing to the other, ev­ery­thing aside from these al­lowances may be taxed at 40 per cent.

“For mar­ried cou­ples leav­ing ev­ery­thing to the sur­viv­ing spouse, there will be no in­her­i­tance tax to pay on the first death no mat­ter how big the es­tate is. What’s more, when cou­ples leave as­sets to one another, their nil rate bands also pass over to the other, so that the sur­viv­ing spouse can leave £650,000 of cash and (as­sum­ing they are pass­ing it to chil­dren or grand­chil­dren) £200,000 worth of prop­erty free of tax.

“The same does not ap­ply to un­mar­ried cou­ples.”

Ms Coles said there are also ben­e­fits to be­ing mar­ried where money is held in Isas.

She said: “They may be sub­ject to in­her­i­tance tax, but if you are mar­ried, you get an ad­di­tional Isa al­lowance – equal to what­ever your spouse held in Isas at the time of their death. It’s known as an ad­di­tional per­mit­ted sub­scrip­tion al­lowance – or APS.

“It means that af­ter pro­bate, you can wrap as­sets into this APS again, and shel­ter them from tax. If you aren’t mar­ried, there’s no APS.”

Sir Ken, who was knighted in hon­our of his decades-long show­biz ca­reer and char­ity work, was ac­quit­ted fol­low­ing a five-week trial, ac­cused of tax fraud, in 1989 and would later joke about the case.

Tas­nim Khalid, head of wills, trusts and es­tate plan­ning at JMW Solic­i­tors said: “Leav­ing an es­tate to a legally mar­ried spouse rather than a part­ner or co­hab­itee has huge tax ad­van­tages...

“We had a client who was once ex­posed to sev­eral mil­lions of pounds in in­her­i­tance tax but the sim­ple act of mar­riage erad­i­cated the tax li­a­bil­ity al­to­gether.”

> Ken Dodd with wife Anne, who he mar­ried just be­fore he died

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