IHT for Single People, inc Business Assets

Inheritance Tax Calculator for Single People

Purpose of calculator.

This calculator is designed to help people find out whether or not they may have an IHT problem. It should be placed in context as a very rough guide, NOT an actual IHT calculator.

You may use whichever of the notes you see fit, or rewrite them in your own style. We do however consider that for the calculator to be compliant on your web site their content should be easily accessible to the reader, though they could be set inside Alerts, or Pop Up Notes window.

Calculator notes

Assumes Nil Rate Band of 263K
Tax rate is 40%
Valid for tax year 2004-5
Business Property Relief is very complex. Advice is a must. This calculator assumes the special case that you have control of a limited company (ie more than 50% of shares), or are a sole trader.
IHT should not be considered without taking into account Capital Gains Tax. For example moving a business building from personal to corporate ownership can remove it from your estate, but doing so might trigger a Capital Gains event and thus a tax bill today instead of some time in the distant future.

Total value of all homes(1)

Current value of investments(2)

Value of art, antiques, collectibles etc.

Value of life insurance (3)

Total of all outstanding mortgages (4)

Value of Loans owed TO you (5)

Business Assets (6)

The value of the business (7)

The proportion of the business owned by you. 55% as 55 (8).

The value of any buildings used by the business but owned by you (9).

Results

Total Value of Estate

IHT

(1) - Main residence and additional homes.

(2) - Stocks, Shares, Deposits, National Savings etc. Includes investment property, whether or not rented out.

(3) - Ignore Life Insurance linked to a mortgage. Other life insurance may actually be outside of your estate and thus not count for Inheritance Tax purposes. If it isn't, we can probably adjust it so that it doesn't count for IHT. We need to see the documents to assess this.

(4) - Only list debts that are NOT covered by Life insurance.

(5) - If you have lent significant sums of money then this debt owed to you is an asset of your estate, and could create a tax liability. If you do not really expect repayment, (especially if it is a family matter), then consider turning the debt into a gift.

(6) - If you expect to sell the business in due course then leave this section blank and put the numbers into the investments section. This will reflect the likely position when the IHT bill arises.

(7) - Total value of business, if not sure, simply what you would sell it for as a going concern. Includes any buildings and plant owned by the company. Dedeuct from this figure any debts (mortgages, overdrafts etc).

(8) Proportional valuations are complex. 51% of a firm is worth more than 2% more than 49%. However for this exercise we assume simple proportionality. Note that the calculator assumes that you own over 50%.

(9) This only applies where the business has actively used most of the building, (ie using one office in a block, or one shop in a row, may not suffice), and you have owned the property for at least two years.