Dodd’s planning leaves diddy IHT bill
16th March 2018
Posted in Articles, Featured Articles, Inheritance Tax, Trusts and Estates by Andrew Marr
The national papers have made much of Ken Dodd ‘having the last laugh’ by marrying Anne, his partner of 40 years two days before his death so as to avoid a £2.5M inheritance tax (IHT) bill. The marriage allowed Ken’s assets to pass free from IHT because of the inter-spouse IHT exemption that does not apply to long-term partners.
Perhaps the more pertinent news should have been how he left an obvious bit of tax planning until the very last minute! Had he mis-timed his demise by a few days then a wholly avoidable tax bill would have been triggered and all the tickle sticks in the world would not have helped Anne.
Of course Ken Dodd is no stranger to the tax world having been famously on trial for tax evasion in 1989. During the case the judge asked him: “What does a hundred thousand pounds in a suitcase feel like?”
Dodd replied, “The notes are very light, M’Lord.”
The experience also led to some great comic moments for Dodd including: “I told the Inland Revenue I didn’t owe them a penny because I lived near the seaside.”
Dodd was represented by George Carmen QC, who in court famously quipped, “Some accountants are comedians, but comedians are never accountants”.
Death bed planning
Ken Dodd’s ‘death bed planning’ was in some ways not planning at all but simply avoided what would be an unjust tax scenario. However this is a timely reminder of the general principle that there is IHT planning that can be done when somebody is on their death bed, although this is often the time when tax is the last thing on people’s minds. Examples of possible strategies are as follows:
- Simple marriage of partners – like Ken Dodd.
- We recently heard in the news about the two heterosexual Irish men who got married!
- Explore the possibility of restructuring investment companies into trading companies (so that business property relief (BPR) can be used).
- Gifts can be made prior to death which can improve the main residence nil rate band.
There are a variety of other opportunities subject to specific circumstances.
