The Gazette 1993

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GAZETTE NOVEMBER 1993
Assets
X - House (sole name): £100,000
X» Contents (sole name): 15,000
• Bank account (sole name): 30,000
X • Shares in PLCs joint
names with spouse: 100,000
X • Bank account joint name
with spouse: 50,000
X • Life policy - children
nominated beneficiaries: 20,000
X • Bank account joint names
with children: 20,000
Gross Estate
Debts
£315,000
• General: 5,000
• Mortgage: 20,000
• Funeral Expenses: 2,000
• Administration Expenses
(estimated): 5,000
The assets exempt from probate tax are
marked X
Net Value of assets over
which power of disposition: £145,000
Deduct House and Contents: 115,000
35,000
Deduct Debts, Mortgage and
Funeral Expense: 27,000
Taxable Value: 8,000
As value is less than £10,000 no tax is
payable.
If "A" died with all the above assets in
sole name the following is the tax
calculation.
£315,000
115,000
27,000
173,000
• Value of Estate
• Deduct House and
Contents
• Deduct Debts, Funeral
and Mortgage:
Taxable Value:
Tax at 2% = £3,460
The tax where payable is borne
proportionally by each beneficiary, to the
extent of the amount of the value of their
inheritance, unless their particular
inheritance is exempt from probate tax 19.
The Revenue have given relief in respect
of quick succession in the case where a
spouse dies leaving a spouse and a
dependant child, if the surviving spouse
dies within one year, or within five years
if the surviving spouse was to die
leaving a dependant child the tax shall
not be charged on any property on which
tax was already paid20.
The new probate tax makes the
necessity of careful estate
planning all the more relevant to
disponers. As practitioners we
should review all our wills with
our clients.
The new probate tax makes the
necessity of careful estate planning all
the more relevant to disponers. As
practitioners we should review all our
wills with our clients, as while they may
have made provision to minimise
Capital Acquisitions Tax on their death,
their estate might still be liable to
probate tax which in the case of farms
or business assets could place a
considerable additional financial strain
on a beneficiary. As joint property is
currently totally excluded from the
scope of the tax, it is one route a
disponer could consider, especially
where a spouse is to be the principal
beneficiary. As practitioners we have an
opportunity to impress upon our clients
the necessity for estate planning,
especially as if past experience is any
guide, we can expect the Revenue to
attempt to increase the tax take from
this tax by increasing the percentage
charge in years to come. It must always
be remembered that unlike Capital
Acquisitions Tax, whereby a spouse
takes from another totally free of
tax, same is not the position with
probate tax.
Appendix
1. Section III (c) Finance Act, 1993. In
addition each person entitled to an
interest in possession to a share of the
estate of the deceased or for whose
• benefit any of the property subject to a
relevant trust is applied or appointed
shall also be responsible. Section III (d)
Finance Act, 1993. This charge applies
as if each of those persons were a person
referred to in section 35 S.S.2 Capital
Acquisitions Tax Act, 1976.
2. Section 113 Finance Act, 1993.
3. Section 117 Finance Act, 1993.
4. Section 117 (b) Finance Act, 1993. The
interest is charged at simple interest
rates. If the tax is paid within nine
months the amount of the tax should be
reduced by multiplying the amount of
the tax by 1.25%, and multiplying that
figure by the number of complete
months outstanding to the ninth month
from the valuation date. If tax is
overpaid by the taxpayer it will be
funded with interest of 0.06% per month.
The amount of interest cannot exceed
the amount of the tax - section 117 (d),
1993.
5. Section 116 Finance Act, 1993.
6. Section 118 Finance Act, 1993. The
Revenue have indicated that only in
exceptional circumstances will a
postponement of tax be granted.
7. The Revenue have indicated that if the
securities are lodged with them with a
consent to have a stop placed on the
securities, and an undertaking to execute
a formal transfer when the personal
representative is legally empowered to
execute a transfer, they will accept same
as complying with section III (h)
Finance Act, 1993.
8. Section 109 Finance Act, 1993.
9. Section 10, sub-section 4, Succession
Act, 1965. "The references in this
section to the real and personal estate
of a deceased person are to property to
which he was entitled for an estate or
interest not ceasing on his death, and
include property over which he
exercised by will a general power of
appointment."
10. Section 112 (c) and (d). A dependant
relative has the meaning assigned to it
by sub-section (9A) (a), (as inserted by
the Finance Act, 1979) of section 25
Capital Gains Tax Act, 1975. A
dependant child has the meaning
assigned to it by section 109 Finance
Act, 1993. For the exemption to apply
to a dependant child or dependant
relative, they must ordinarily reside in
the premises.
11. Section 109 Finance Act, 1993 as
enacted, gives the taxpayer the option
of nominating which residence the
exemption applies to where more than
one residence is used equally.
12. Section 109 Finance Act, 1993 - see
definition of "the net market value of
the dwelling house".
(Continued on page 358)
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