Jade Goody, income tax and inheritance tax question

[tinman0]

Not going to get into a Jade Goody slagging off thread. If you don't like her, keep it to yourself than destroy this thread please.

Here's the question:

Jade Goody was earning a huge amount of cash in the year before her death, and has died within the tax year. So what happens to the money?

Does 40% get paid in income tax and another 40% in inheritance tax in a single year?

[off_again]

Probably paid to her management company, who then has a number of options. There will be directors so some earnings could be taken that way. Alternatively, it could be paid as a lump sum and put into trust for her kids. Probably a mixture of the two, but since its not benefiting her directly (but minors) there are a number of ways to resolve the taxation for this.

Put simply, she wont have, her estate will not be and her kids wont be having 40% tax applied to the earnings.

Anyone who earns millions and doesn't take care of the tax issues related to it deserves to get mauled by the HMRC. But for those that do, there are so many different (and LEGAL) ways to do this. Oh, and inheritance tax is not an issue. Again lots of ways to avoid paying this too.

[Mx_Stu]

Simple answer would be yes.

But in this case you will probably find her earnings are paid into Jade Goody Limited. At which point the company will pay tax on its profits, but she will only pay tax only what she took out as earnings/ dividends.

A spousal transfer of the shares in Jade Good Limited prior to death to her husband would mean nil IHT at which point he can transfer the shares to trust for her boys and as long as he survives 7 years no IHT to pay.

Of course anything could have happened behind the scenes...