IHT

As far as I understand it the first £325,000 of the whole estate is tax free. An additional allowance of £175,000 is allowed if the home is passed onto children.

I have friends who have put their homes into trust to avoid paying tax but in my opinion this is dodgy as if you later need to go into care etc the council look int this and accuse you of a deprivation of assets.

I am think you need to be careful and get the advice of a reputable lawyer. Our financial advisor would never advise such a trust.

You need legal advice! GSM where are you?

The IHT is indeed still held at £325K per person - but if you are married and your spouse pre-deceases you - you inherit his/her allowance, so your IHT becomes £650K and yes, there is an additional £175K as a primary home allowance. So your total ‘wealth’ before IH is applied would be £825K (£500K if you are single or divorced).

As for Trusts, that’s an emotive subject and you would need a solicitor to explain the implications of this and how to proceed.

Yes indeed, it’s GSM’s explanations we need here

I believe you would also inherit your spouse’s £175k

The gov.uk information is useful.

www.gov.uk/inheritance-tax

I'm not sure that I'm much bothered about IHT. After all, I'll be dead. I'm quite happy to pay taxes and always have been.

Thank you for your replies... whoaaaaa I'm totally out of the box in all this, its not a BIG issue as in it praying on my mind but it just brought me to thinking its ok me ( or anyone ) crossing t's and dotting i's in the A,B,C's of the practicality issues in life but then what about the legal side !!!!!

I don't fall into the bracket of the 350K but anything below that now seems to be an issue..... i suppose you could say its just out if interest to know these things, as they say you're never too old to learn hahahahaha.. ( she manages to laugh despite being confused 😕 )

You can pass on a house to direct line ie children grandchildren. I believe in that case the house is removed from inheritance tax. I think the value can be up to a million £

Also, in my case, anything remaining in my sipp will go to AC without iht

Its wooly but remember that only 4% will pay iht

Widows get their husbands iht attached to their own iht allowance, so mine would be 2 x £325 = £650

According to government statistics, fewer than 4% of estates in UK paid IHT in 2020-2021, but that has increased as property values have increased.
There is no IHT if the estate goes to the spouse.
In general, for the second death, an estate can be as much as £1m before IHT is payable, but it depends. I am not a lawyer.
Trusts can be a minefield and specialist advice should be taken from a STEP lawyer.
Some will writers advertise that they can set up a trust to avoid care fees. It is unlikely to work. Avoid, as they are not regulated, and consult a solicitor instead.

It’s rumoured that the Chancellor is looking at IHT in the forthcoming Autumn Statement.

With a GE on the horizon….

I’m divorced . So, if I leave my house to my children, they will not have to pay any Inheritance Tax ? What about the savings and jewellery? Not much, but I’d like to know. Where’s GSM ?

Your estate consists of your house, jewellery, savings, car- and any gifts you have made in the last seven years, can affect IHT.

Depends on the value of the house Crazy

It’s not advisable to make a trust to avoid paying care home fees. Have you seen the care homes that Social Services put people in? We were able to choose a lovely care home for my mother because she was self funding.

This is on the BBC website now, what is IHT.

www.bbc.co.uk/news/business-36014533

There has been speculation that the 40% inheritance tax might be halved which would be great news.

Of course it would be a lot better if this very unfair tax was abolished completely, but it’s thought that is unlikely to happen.

This tax was originally set up to just apply to the very wealthy, but of course as others have pointed out, property prices have shot up so much over the years that many more people are now affected - people who are reasonably comfortably off, but certainly not seriously wealthy.

Any reduction though would be a step in the right direction, and probably a vote winner, as it’s not something Labour would consider.

Great link from Jaxjacky to the BBC website, which sums up the main points. If circumstances don’t fit those criteria, seek advice, but generally many people will not be affected.

Surely it makes financial sense to pass jewellery say, onto relatives whilst you are still alive?

My modest semi in Kent will take me over the threshold - I'm divorced. Not much I can do about it. As others have said, I have mixed feelings about this as I am a believer in paying taxes, but feel that the money I invested in my property has already been taxed once...

A married couple each have a tax free allowance of £375k, there is no inheritance tax between spouses so that £375K is passed on to the spouse who outlives the other. However, there is an additional £125K for each person available if they own a house , so basically if you own a house worth a million you can pass that on to your children or grandchildren without paying any inheritance tax. Even if you downsize to a cheaper property you can claim the value of your previous more expensive property. Just to clarify, if your home is worth less than a million you can't count any cash, jewellery etc towards it, it has to be a house. If you are divorced or unmarried you have £375K + £125K, so if you live in a house that's worth less than £500K you won't pay anything on the value of your home but if your home is worth more than £500K you will pay on the amount over £500K.

Surely your ‘estate’ means your home and possessions, not just your property? This is to foxie.

Many people don’t live in a million pound property, but have investments etc which brings up the value of their total wealth.

foxie48. I’m afraid your figures are wrong - perhaps fat fingers.
It’s £325K not £375K and the primary dwelling allowance is £175K

To anyone confused - and it is confusing - get legal advice!!
Probably the best money you’ll spend for a long time.

Georgesgran

*foxie48*. I’m afraid your figures are wrong - perhaps fat fingers.
It’s £325K not £375K and the primary dwelling allowance is £175K

To anyone confused - and it is confusing - get legal advice!!
Probably the best money you’ll spend for a long time.

Ha, OH said it with great authority, I should have checked but I knew it added up to £500K! Thanks for correcting it.