Sir Ken Dodd got managed to get the last laugh at the taxman by getting married just two days before he died.
Aged 90, Dodd married Anne Jones, his partner of 40 years at the home he had lived in his entire life.
The beloved Liverpudlian comedian – who was affectionately named Doddy by his fans – had a problematic relationship with the taxman after being accused of a £800,000 tax fraud. In 1989, he faced 27 charges relating to tax evasion and it was revealed that he kept cash stuffed in wardrobes, cupboards, and suitcases in the attic. When asked by the judge what a hundred thousand pounds in a suitcase felt like, Dodd famously replied: “The notes are very light, M’Lord.” However, following a three-week trial, he was acquitted of all charges.
Having been in hospital with a chest infection, his decision to marry Anne Jones in a secret ceremony just 48 hrs before he passed away means he has avoided a massive inheritance tax bill.
Commenting on the situation, Tasnim Khalid, head of wills, trusts and estate planning at JMW Solicitors, said: “Leaving an estate to a legally married spouse rather than a partner or cohabitee has huge tax advantages.”
At present, cohabiting doesn’t give you any legal protection after a break-up. So, if one partner dies, the other could find themselves in a very difficult position. Likewise, cohabitees are subject to inheritance tax (IHT) on any value over the current threshold of £325,000.
For homeowners leaving a main residence to direct descendants, an additional allowance – the residence nil rate band – will apply. This is currently at £100,000, set to rise each financial year by £25,000 until 2021.
However, couples who are married (or in a civil partnership) are exempt, and this can make an enormous difference to the tax due. With Sir Dodd’s estate estimated at £7.2m, this could have meant a £3m IHT bill.
Sarah Coles, a personal finance analyst at Hargreaves Lansdown, also said: “For unmarried couples, when one dies and leaves everything to the other, everything aside from these allowances may be taxed at 40 per cent. For married couples leaving everything to the surviving spouse, there will be no inheritance tax to pay on the first death no matter how big the estate is.”
Ms Coles added: “What’s more, when couples leave assets to one another, their nil rate bands also pass over to the other, so that the surviving spouse can leave £650,000 of cash and (assuming they are passing it to children or grandchildren) £200,000 worth of property free of tax”.
