We recently saw the passing of the much loved comedian Ken Dodd. In the past “Doddy” had had run ins with the taxman but did he have the last laugh?
Two days before his death the comedian married long-term partner Anne Jones, with whom he had shared his Liverpool home for the past 40 years.
In doing so it avoided a potential inheritance tax bill of nearly £3m
Ken Dodd’s estate was worth an estimated £7m and would have been liable to 40% rate of Inheritance tax.
However, assets can be passed between married couples free of Inheritance tax on death.
The nil-rate band for inheritance tax is currently £325,000, while homeowners have a residence nil-rate band at £100,000 if the home is left to a direct descendant.
This situation emphasizes the difference between “common law partner” and a married couple.
The surviving spouse may inherit the entire estate tax free and inherit any unused portion of the nil portion of the nil rate band and the residence nil rate band.
This means that the survivor, on their death, will have a nil rate band of £650,00 plus the residence nil rate band (£250,000 for this year)
Ken Dodd previously faced a tax evasion case, back in the late eighties. He was charged with 27 counts of tax evasion over many years where it was claimed he had undisclosed overseas assets, mainly bank accounts in Jersey and the Isle of Man, where he flew regularly to deposit undeclared cash.
It is true to say that at the end he was found not guilty although he settled in full including penalties.
The case revealed some of the comedian’s eccentricities, including the fact that he had more than £300,000 worth of banknotes in his home stashed in wardrobes, cupboards and suitcases.
In the years after the case Dodd went on to make light of his experience, and in the following years often introduced himself onstage with the line: “Good evening, my name is Kenneth Arthur Dodd, singer, photographic playboy and failed accountant.”