Inheritance tax and sovereigns.

[MickB]

Are sovereigns classed as having a one pound sterling value when it comes to inheritance tax laws?

I was told today by a work colleague that an old neighbour of his is buying sovereigns to leave in his will so his family don't get hit with a hefty inheritance tax bill.

If for example say you have 500 sovereigns to leave someone, then this would be classed as leaving £500 to them, not the full gold value.

Would this be true or has the old man got it wrong?

[terakris]

This has some info on CGT

https://articles.royalmintbullion.com/gold-and-capital-gains-tax/

[Miganto]

As far as i'm aware, It's classed as property at the full value of the coin.  Pass the coins on to other members before you die and it's not your property any more, thus doesn't come into play with the cap before you pay tax.

 

It's unrelated to CGT and also to face value.

[tallyhojim]

Inheritance tax only applies if the State knows about your wealth.

So don't tell them.

[Miganto]

*delete*

[kimchi]

Sovereigns? What Sovereigns?

Just don't hide them somewhere completely unexpected/devious that isn't in a sealed 'personal private letter' that is bequeathed by your Will (or bury them in your grounds/the general countryside and then lose the map ).

 

[kimchi]

42 minutes ago, MickB said:

Are sovereigns classed as having a one pound sterling value when it comes to inheritance tax laws?

Still a good question though!

I would imagine they are classed at gold value rather than their nominal value (when does anything ever go in our favour?), but look forward to hearing what others have to say

 

[Martlet]

If you're willing to pass them on for £1, then maybe you can say they are worth that.  Of course, you aren't so they are valued at the market value.  It's the same as company shares, nominal value might be 1p, 10p but they'll be valued at market price at time of sale.

The way to avoid IHT is to gift them to family and friends 7 years before the end. 

[Avrocarr]

For IHT sovereigns are market value on date of death 

[sixgun]

Bag them up - mark them up - seal these opaque bags - label for the person you want to have them - put in the will - administrator Harry Todd to distribute bags of £1 coins.

To Sally i give 16 x £1 coins
To Jimmy i give 11 x £1 coins
To Freddy i give 14 x £1 coins

Blah blah.

The administrator hands out the bags - job done.  Don't think too hard about it - you wouldn't, these are bags of small change.

[MickB]

The best way to deal with a large amount of sovereigns is to not say anything at all but it makes me wonder why the old fella had the idea that they'd only be worth a quid each in relation to inheritance tax law? I didn't know if there's a loophole that isn't common knowledge that he's aware of. I know about cgt but this is a different scenario. 

If it's wrong what he's been quoted then that's that but if true a 1oz gold Britannia would then be worth £100, so you'd get more of a saving in buying sovereigns in money to gold ratio. 

[MancunianStacker]

I thought the same. It could reduce IHT by 300 times etc.

They'll probably want to get rid of gold once they have got rid of cash. Very hard to trace and tax!!! 

[sixgun]

2 hours ago, MickB said:

The best way to deal with a large amount of sovereigns is to not say anything at all but it makes me wonder why the old fella had the idea that they'd only be worth a quid each in relation to inheritance tax law? I didn't know if there's a loophole that isn't common knowledge that he's aware of. I know about cgt but this is a different scenario. 

If it's wrong what he's been quoted then that's that but if true a 1oz gold Britannia would then be worth £100, so you'd get more of a saving in buying sovereigns in money to gold ratio. 

i spoke to my mother about this. She said to give the coins out before you die. i know of relatives who have given out bits of jewelry like this. You just give the coins. Who knows what you have? Say nothing. You are not a slave so don't act like one and beg for the Crown to take your property.

[universalcurrency]

It raises an interesting question, I don't think you could argue that sovereigns are only £1 in value as they never had a nominal value marked on them unlike say 1 oz britannias which have £100 marked on them.  The last time they were valued at a pound was probable when the UK was on the gold standard  pre 1931.  If there is no paper trail then the inheritance value is surely at the desecration of whoever is administrating the will, make of that what you will I am not giving legal advice.

As an aside I have heard of people crossing borders and only declaring the nominal value marked on the coins. 😀

[Xander]

The guaranteed way would be as @Martletsaid, do it "7 years" before you peg it. That way the thieves get nothing. Or if it was me and I had my wits about me I wold make up a wicked bucket list and go for it. Obviously make sure there is plenty left for the family.

[Pete]

You have to have a substantial estate before IHT kicks in.
If you are living in the SE of England and have a decent house then its value alone will get you pretty close ( maybe well over depending on exactly where you live ) to the IHT threshold.
Just pray that Corbyn and his Marxist pals don't get into power because they will tax the lot, even the contents in your fridge.

As for sovereigns I am afraid the taxman will value them at full value irrespective of the marked denomination.
If you bought a famous painting for £100 and it's valued, even if unsold, at a million then the tax will be charged on the higher value forcing its sale.
All your stack could be taxed at full value at 40% and your heirs will have to sell, possibly below market value, as they will have no choice but to sell immediately.
Really sucks !!
Keep your stash hidden but if discovered I believe the tax demand doubles.

[sovereignsteve]

sovereigns are probably legal tender but not circulating currency and as they are not marked as £1 you would have no chance treating them as £1 coins.

1 hour ago, Xander said:

The guaranteed way would be as @Martletsaid, do it "7 years" before you peg it. That way the thieves get nothing.

the 7 year rule is also subject to sliding relief. I can't remember when it kicks in but but after that time the tax payable reduces to zero after the 7 years have passed.

1 hour ago, Pete said:

If you are living in the SE of England and have a decent house then its value alone will get you pretty close

as well as your £325 IHT relief threshold, you also have the newly introduced Inheritance Nil-rate Band which started at £100k for 2017-18 and will rise to £175k in 2020-21

but still not much good for properties daan sawf😉

[Tn21]

I know a retired Dr who is fairly wealthy. He has got 5 rental properties all flats in London and about £80k in the bank. Unfortunately his quality of life is sad to witness and to be frank he is waiting for his death. 

Now he has a will however in my opinion he should just go all in into au coins and bag them up as sixgun mentioned so that the will can be executed later on. Not that he is going to do it because very few people believe their money is safe outside of a bank. 

In the end once his life comes to an end his accounts will be frozen, probate comes into play and the vultures circle (lawyers fees and family members). 

 

[Tn21]

Dr above has just gone and done a wise move, spent 20k on au. I give him credit because many people are not brave enough to venture in this space but he had no issues with it at all. 

Just thought it's worth sharing. 

[Kookaburracollector]

On 13/10/2019 at 06:50, Tn21 said:

I know a retired Dr who is fairly wealthy. He has got 5 rental properties all flats in London and about £80k in the bank. Unfortunately his quality of life is sad to witness and to be frank he is waiting for his death. 

Now he has a will however in my opinion he should just go all in into au coins and bag them up as sixgun mentioned so that the will can be executed later on. Not that he is going to do it because very few people believe their money is safe outside of a bank. 

In the end once his life comes to an end his accounts will be frozen, probate comes into play and the vultures circle (lawyers fees and family members). 

 

He should emigrate to Australia and spend his last few days in the sunshine...plus NO INHERITANCE TAX!. 
Failing that, I recently had a dentist friend inherit a huge inheritance of coins from his doctor father...a very sympathetic probate valuation was obtained from a well respected dealer in Birmingham...saved him loads...PM me if you want details..

Best response so far I reckon ‘What Sovereigns’...well done @kimchi!

People need to realise a bank deposit makes you effectively an unsecured creditor...the lowest of the low. Thank goodness I’m not rich enough to worry about these type of issues.