I think technically they are part of your estate - so would be included. Of course if someone slipped the watch into their pocket - who knows - I don’t advocate tax evasion- honestly!
Losely watch related, but does anyone know if watches are free from inheritance tax?? Just a casual question for the sake of interest really as I was chatting so someone at work the other day (who is considerably richer than I) who reckoned that the price of shotguns which he is really into - Holland and Holland, Purdey etc - was going through the roof as they are free from inheritance tax and old people are buying them to leave in their wills, the reasoning being that they are a mechanical item. He also reckoned that watches and even possibly cars would fall into this same bracket.
I can’t see it personally, seems like a load of old cobblers. I have had a quick look for some info on the internet but can’t find anything. Just wondered if anyone knew anything about this or whether it was just the usual man-rubbish talk.
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I think technically they are part of your estate - so would be included. Of course if someone slipped the watch into their pocket - who knows - I don’t advocate tax evasion- honestly!
I recall the phrase “ wasting or deprecating , asset “ where mechanical maintenance need to be applied to vintage cares , clocks and horological items as far as death duty application is / was concerned.
It would be very useful if one of the members could provide a “ timely “ update of the current legal status .
Thank you to the original poster of this question.
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I’m STEP qualified, own a trust company and have done a great deal of IHT planning for clients over the last 30 years. As in any field “expertise” is a relative commodity. I’m not as “expert” as the £1500/hr QCs I go to for advice when my knowledge runs out. But for the purpose of this question I’m “expert” enough to confirm definitively that watches (ditto cars and shotguns) do not benefit from any relief from IHT unless you happen to be a dealer and they are your trading stock.
Just to add- “machines” like watches and cars are as an earlier poster said treated as wasting assets which means that gains made on selling them are not subject to CGT. But that’s a different tax.
A lot of folks confuse CGT and IHT: lots of assets are exempt from the former, but very few escape the latter. End of the day IHT is easily defeated with some planning e.g. PETs or via trusts.
I'll stop the acronyms there
I strongly suspect that the OP’s “old bollocks” conclusion is the correct one.
I’ll have a look as a matter of interest!
I’ve known various people over the years that have thought watches and even jewellery are excluded from IHT. They then say they won’t put the information in their Will’s, to which I’ve replied that I take it they don’t insure these items? I don’t know if it happens much, but I guess they only need to ask to see a copy of the home insurance policy to see what items have been individually insured.
Whether or not IHT is due is dependant on the value of the estate. Jewellery and watches would be regarded as an asset and should be included in the estimate of the value. See the attached link
https://www.gov.uk/valuing-estate-of...e-estate-value
Definitively wrong. Due to property prices it's extremely common nowadays for people to plan around it and it;s not exactly expensive or complicated in most cases.
Indeed, only the stupid/negligent fail to plan to avoid IHT if they know their assets are likely large enough to incur it.
Evening Dave.
“Property” is one of the most misused words in the language. The Inheritance Tax Act 1984 itself at section 272 defines “property” as including “rights or interest of any description” - clearly much wider than what has become the everyday usage denoting land and buildings, ie “immovable property” or “real property”.
There are IHT reliefs for certain categories of property (in the wide sense); notably business and agricultural property. So a working farmhouse or office or shop or factory together with related equipment and stock might qualify as relievable property.
In the straightforward case of a UK domiciled individual, an outright gift of a watch collection to children would not attract IHT at the time of the gift and would escape IHT altogether if the donor survives the gift by seven years.
You must have some watch collection to be asking that!
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It’s tax evasion. Plain and simple.
Because watches are not exempt from inheritance tax, and are therefore taxable as part of the estate.
If someone were to just take them or not declare them then it's tax evasion.
Personally I use every tax avoidance method going for IHT as I feel it's a dirty and plain wrong concept.
Tax avoidance is good planning, evasion is illegal.Sent from my SM-G950F using TZ-UK mobile app
Unfortunately HMRC these days is pursuing a policy of blurring the line between legal tax planning and criminal evasion as a matter of policy. A good tax adviser will work with a client to assess the problem, identify possible solutions and ensure the client is aware of the risks inherent in any solution under consideration.
As to your assessment of the general policy of taxing the gifting of wealth, I couldn’t agree more!
As a bit of a champagne socialist I generally support taxing the wealthy more, however this is on the proviso that it goes to benefit the general population, i.e. education (both basic and further), health care, care of the disabled and elderly, infrastructure, social housing, etc. Unfortunately due to political grafters and general human nature I also hold the view that if I earned something it's mine and no bugger is going to nick bits of it off of me to spend on their expenses, pay-rises or propping up their floundering party by bribing another one to help them out.
This cognitive dissonance gives me a headache sometimes.