Sad news this week: probate records reveal that Rik Mayall, who died in 2014, did not leave a will. Cue much speculation as to the potential inheritance tax (IHT) his estate will have to pay.
The Daily Mirror predicted a “huge tax bill”. The Daily Mail agreed, before adding that the late actor-comedian’s “£1.2million estate could be liable for tax of tens of thousands of pounds”.
The Daily Telegraph, with the oldest readership demographic, titled its article “Rik Mayall’s inheritance tax trap – and how to avoid it”. Now we are getting somewhere… you’d think.
Noting that the rules on intestacy changed in October 2014, the Telegraph helpfully outlined which beneficiaries receive what from the deceased’s estate in the following circumstances: married, no children; married, with children; and unmarried, living with someone, with or without children. The broadsheet then went on to discuss “what all this [sic] means for inheritance tax”.
Basically, what it means is “potentially hefty death duties”, which presumably equate to a “huge tax bill” – because Bottom star Mayall was married with children, meaning part of his estate may pass down a generation, potentially triggering an IHT liability. This would not have been the case had he made a will, leaving everything to his wife.
What the Telegraph didn’t mention – perhaps not wanting to be accused of encouraging tax avoidance – is the possibility of a deed of variation. Surely, this could not be because of the chancellor’s Budget statement this year that “we will conduct a review on the avoidance of inheritance tax through the use of deeds of variation”?
Could this be related to the fact that 70% of Telegraph readers voted Conservative in the previous election and would not want to be party to something Ed Miliband might have taken advantage of?
Naturally, if you want some sound advice on avoiding tax in a similar situation, the best place to go – after Taxation, natch – is the government’s own GOV.UK. The “change a will after a death” page confirms, “You can change a person’s will after their death, as long as any beneficiaries left worse off by the changes agree. If there’s no will the law decides who inherits. You can make changes to the inheritance in the same way as if there’s a will… You can change a will to reduce the amount of inheritance or capital gains tax payable.”
Ordinarily, there is a two-year time limit to make a variation, but, in the light of the Budget, earlier action may be advisable if the Conservatives are re-elected next month (unless, of course, the chancellor’s pledge was just cheap political point-scoring).