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Will the taxman get to share your wine?

Wine may not be the first thing that springs to mind when considering inheritance tax planning but it has not escaped the eagle eyes of HM Revenue and Customs (HMRC).

HMRC is concerned that some executors of wills are not valuing wine cellars correctly for inheritance tax purposes so it has issued a statement to clarify the position.

The statement says: "It has been brought to HMRC’s attention that information in the public domain indicates that for Inheritance Tax purposes wine cellars are valued at the purchase price rather than the value at the date of death. This is incorrect.

"Section 160 IHTA1984 states that for Inheritance Tax purposes the value of any property is the price it might reasonably be expected to fetch if sold in the open market at that time.

"Therefore it is clear that a wine cellar must be valued at its open market value for Inheritance Tax purposes."

Most people are unlikely to have a valuable wine cellar and so won’t be affected. Nevertheless, the statement shows how far HMRC is prepared to go in ensuring it collects as much inheritance tax as possible.

If you wish to minimise the inheritance tax your beneficiaries will have to pay it would helpful to start planning ahead now. If carried out properly, there are several ways to ensure that as much of your estate as possible remains with your children instead of being taken by HMRC.

Please contact us if you would like more information or advice about inheritance tax planning.

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