Death is a taxing matter
Have you considered the stamp duty implications of making a Will?
We are fortunate enough in Jersey not to be subject to UK Inheritance Tax. Taking account of the current threshold of £325,000 and certain exemptions, UK Inheritance Tax is generally 40%. In Jersey, there is a stamp duty which may be payable by those who inherit our assets on our death. Jersey stamp duties are considerably lower than UK Inheritance Tax.
Jersey law categorises assets into movable and immovable, and different stamp duty regimes apply to each. Movable assets include jewellery, furniture, bank accounts, shares (including those that relate to share transfer properties) and investments.
For the purpose of calculating stamp duty on your net movable assets at death, the value of the movable assets is rounded up to the nearest £10,000. The stamp duty is calculated at the rate of 0.5% of the value up to £100,000 and 0.75% thereafter, (plus £50 in the case of professional applications for probate). Stamp duty is paid when the executor or administrator of the estate applies for probate or letters of administration.
Immovable assets include land and everything built on it, leases for over nine years, flying freehold property and the benefit of certain mortgages. Stamp duty is payable on the registration of a Will of immovable estate in the Public Registry and is calculated on a sliding scale, based upon the market value of the property, as at the date of death. The calculation is essentially the same as the stamp duty payable when buying immovable property, and is as follows:
Does not exceed £50,000 – 0.5% with minimum fee of £12
Exceeds £50,000 but does not exceed £300,000 – £250 + 1.5% of the value in excess of £50,000
Exceeds £300,000 but does not exceed £500,000 – £4,000 + 2% of the value in excess of £300,000
Exceeds £500,000 but does not exceed £700,000 – £8,000 + 2.5% of the value in excess of £500,000
Exceeds £700,000 but does not exceed £1,000,000 – £13,000 + 3% of the value in excess of £700,000
Exceeds £1,000,000 but does not exceed £1,500,000 – £22,000 + 4% of the value in excess of £1,000,000
Exceeds £1,500,000 but does not exceed £2,000,000 – £42,000 +5% of the value in excess of £1,500,000
Exceeds £2,000,000 but does not exceed £3,000,000 – £67,000 +6% of the value in excess of £2,000,000
Exceeds £3,000,000 – £127,000 + 7% of the value in excess of £3,000,000
An additional charge of £80 is payable in the case of all professional applications.
Certain exemptions apply to the stamp duty payable on immovable property where the property in question is the matrimonial home (not owned jointly), or where the Will leaves the immovable property to those who would have inherited had there been no Will (an intestacy), in the same shares as they would have inherited on an intestacy. For example, no stamp duty is payable in the case of a widow, widower or single mother, leaving their entire immovable property to their children on death. However, if that parent left individual properties to individual children in their Will, stamp duty would be payable. Furthermore, there would be no benefit to transferring the properties in question to the children prior to death, as the rate of same stamp duty would apply to such transactions.
Not unusually, the situation arises where those who inherit, especially under a Will of immovable estate, have insufficient funds immediately available to pay the stamp duty for registration of the Will.
A legitimate way of avoiding stamp duty on death is to hold assets jointly for the survivor with another. It is not unusual for couples to hold their assets in this way. Stamp duty would only be a consideration on the death of the last joint owner. There are however some instances where this is not possible (for example with regard to ownership of motor vehicles and certain investments), or indeed desirable, due to prevailing circumstances (including the nature of the relationship between the parties).
For all the reasons set out above, it is important that consideration is given to the impact your wishes as expressed in your Wills, may have on the amount of stamp duty payable on your death. The reality is that with some fairly straightforward estate planning, the saving on stamp duty can be considerable, leaving your loved ones financially better off. Viberts offers expertise in this area and would be delighted to assist you. Call us today on: +44 (0) 1534 632263 to discuss your estate planning requirements.