Home > Scottish Wills > Tax Issues

Tax Issues

By: J.A.J Aaronson - Updated: 1 Nov 2010 | comments*Discuss
 
Tax Issues Scottish Wills Inheritance

The laws governing inheritance tax can seem complex. This is also true for the apparently never-ending reams of legislation that concerns the disbursement of estates the legality of a will, the intestacy process, and so on. The bulk of the information that is easily available on these topics, however, relates solely to English and Welsh regulations. While Scotland shares much of this law, there are a number of important Scottish-centric issues regarding taxation that should not be overlooked.

Procedural Differences

In many cases, the differences are purely procedural. One of the key procedural differences regarding inheritance tax relates to the forms that must be completed after the death of an individual. If the deceased lived in England then two separate forms must be filled in: a probate application form and IHT205, which is an Inheritance Tax (IHT) account form. If, however, the deceased individual lived in Scotland and the estate is likely to be ‘accepted’ (that is, it is unlikely to be subject to Inheritance Tax), then it is only required that form C1 be filled in. This form is then sent to HMRC in Edinburgh where it will be kept. If Inheritance Tax is required to be paid on the estate then this office will inform the individual who filled in the form. If this does not happen within 60 days then IHT is not applicable by default. It should be noted, however, that if it seems likely that IHT will be payable on the estate then two forms must be forwarded. The first of these is C1, as outlined above; however, form IHT200 must also be completed. Both can be downloaded from the DirectGov website, along with supporting notes that give guidance on how to fill in the forms accurately.

Business Partnerships

There are a number of other issues that need to be considered depending upon your business status. In Scotland, a business partnership is considered to exist in the same way that an individual person does, and can therefore legally own property. This obviously has Inheritance Tax repercussions for those who are in such a partnership. In order to understand these repercussions it is necessary to understand the distinction between ‘movable’ property and ‘heritable’ property. In basic terms, the latter term describes buildings and property, while everything else falls into the former category. A share in a business partnership is, therefore, counted as movable property. If the partnership owned heritable property then this will therefore be treated as movable for the purposes of inheritance. When combined with the fact that it is very difficult to dis-inherit children under Scottish law, this can pose problems for those who own a share in a partnership but who wish for that share to pass to their business partner. Similarly, it can make passing heritable portions of business partnerships onto one but not all of an individual’s children impossibly expensive for the inheritor, as all of the other children could conceivably make a claim to equal portions of the inheritance. As a result, many individuals in Scottish business partnerships may consider moving their portion of the partnership’s assets into other vehicles in order to avoid such problems.

You might also like...
Share Your Story, Join the Discussion or Seek Advice..
Why not be the first to leave a comment for discussion, ask for advice or share your story...

If you'd like to ask a question one of our experts (workload permitting) or a helpful reader hopefully can help you... We also love comments and interesting stories

Title:
(never shown)
Firstname:
(never shown)
Surname:
(never shown)
Email:
(never shown)
Nickname:
(shown)
Comment:
Validate:
Enter word:
Topics
Latest Comments
  • Mash1ey
    Re: How Legally Binding is a Will?
    Hi, my great Gran has recently passed away and she has left her house to myself and brother in her will, on the condition it is…
    14 October 2017
  • TheWillExpert
    Re: How Legally Binding is a Will?
    Candy - Your Question:My dad had a revised will drawn up in 2012, leaving all his possessions to the thre children. Then in…
    11 October 2017
  • Candy
    Re: How Legally Binding is a Will?
    My dad had a revised will drawn up in 2012, leaving all his possessions to the thre children. Then in 2015, he had his house…
    10 October 2017
  • TheWillExpert
    Re: Life Estates
    sack - Your Question:I am a life tenant. step son has padlocked garage. does garage form part of my home, garage is in a block. electricity connected
    9 October 2017
  • TheWillExpert
    Re: Debt After Death
    Toby - Your Question:My wife was power of attorney for their bank over her nan & grandad who has passed away recently. They lived in a carehome &…
    9 October 2017
  • sack
    Re: Life Estates
    I am a life tenant. step son has padlocked garage. does garage form part of my home, garage is in a block. electricity connected and paid for by me.
    9 October 2017
  • Toby
    Re: Debt After Death
    My wife was power of attorney for their bank over her nan & grandad who has passed away recently. They lived in a carehome & fees over a year…
    8 October 2017
  • TheWillExpert
    Re: What Does Being an Executor of a Will Entail?
    kevino - Your Question:Hi my dad died in aug 2017.my step mum of 5 yrs has collected dads will from a…
    4 October 2017
  • kevino
    Re: What Does Being an Executor of a Will Entail?
    hi my dad died in aug 2017 .my step mum of 5 yrs has collected dads will from a solicitor his solicitor wont…
    4 October 2017
  • TheWillExpert
    Re: Debt After Death
    jane - Your Question:My mother in law has passed away and I have been sent a bill for money owed fpr her nursing care fees. She has no money the…
    3 October 2017
Further Reading...
Our Most Popular...
Add to my Yahoo!
Add to Google
Stumble this
Add to Twitter
Add To Facebook
RSS feed
You should seek independent professional advice before acting upon any information on the TheWillExpert website. Please read our Disclaimer.