IHT

No just to your home, I think. So if your home is worth less than £375K, you get up to that amount with savings etc before you pay any tax. For most people I think it's the value of their home that's the main asset, particularly for those living in the south or London.

sorry should have said £325K not £375K, duh!

Your figures are correct Georgesgran. Each individual has a Nil Rate Band (NRB) of £325k, and also a Residential Nil Rate Band (RNRB) of £175k in respect of a property (the Property) which they own at death and which they have lived in at some point.

If spouses or people in a civil partnership leave their entire estates to one another, there is no IHT payable in respect of the estate of the first to die. The survivor inherits the NRB and RNRB of the first to die.

Provided that
1. the survivor leaves the Property to his or her direct descendants (natural/adopted/step/fostered children or grandchildren or the spouse or civil partner of any such) and
2. the Property is worth at least 2xRNRB (currently £350k) and
3. the total value of the survivor’s estate is less than £2.2m

then a property worth £1m could be inherited without payment of IHT.

There are provisions bringing into this relief a property worth less than £1m if it was purchased when downsizing from a more expensive property.

It’s important to remember that the RNRB is only available for a property you have lived in. If your estate includes such a property, the remainder of your estate - money in the bank, investments (other than a pension fund or insurance which may not form part of your estate depending on circumstances), jewellery, cars, furniture, works of art and general household effects) above the NRB+ RNRB x 2 will attract IHT.

There are reliefs enabling businesses and agricultural land, amongst other things, to be passed on free from IHT.

I have deliberately not mentioned trusts - whether or not one is a good idea depends on the individual circumstances - or gifts made within seven years of death.

This is not intended to constitute legal or financial advice. Everyone’s circumstances are different.

Thanks GSM.

Thank you very much GSM.... 😊

Thankyou GSM

Having been involved in the care cost world the first question asked about any property assigned to a Trust by an older person is Why? Never heard an answer that didn't have to avoid charges behind it and therefore was not accepted for care cost assessment. Definitely beware.

I've been looking at this too over the last few weeks. I think it's £325k allowance plus an additional £175k if the house is being passed on to direct descendant ie children/grandchildren. If your DH pre deceases you then you are allowed the same £325k plus £175k on his behalf so a total of £1,000,000 before IHT is payable. At least that's my understanding.

IHT allowances are;

£325,000 per capita + up to £175,000 value of the house per capita (provided house goes to direct descendants = £500,00 per capita

If you are a widow(er) and everything went to you when your spouse died then you inherited his/her unused allowances

Thus legally partnered couples or the survivor have maximum £1million

Tax at 40 % on excess.

The children will get the house ? only after any IHT tax liability has been paid !

House in trust and living in it for free extremely dubious

And of course it is a lot more complicated than the simple basics above .

I am an IFA and specialise in IHT planning and have given webinars on the subject - i suspect i cannot advertise here but find and talk to a good IFA - there is a lot of perfectly legal stuff you can do to turn thus penurious tax into a voluntary tax

Regarding iht, I am fed up of hearing about the wealthy four percent. In the greater London area, property prices are ridiculously high. So our children are crippled by very high house prices and nursery fees. Even with the government paid hours, it costs twenty thousand pounds per year for my two grandchildren to go to nursery four days per week. I cover the fifth day. So I would like my family to get a good inheritance without excessive iht.

My late husbands half of my house is in trust for my children. What's left is more than enough to pay for a slightly better home if needs be. Although two of my children have said they would take care of me I wouldn't hold them to it especially if I have dementia. He majority of everything else ( if theres any left) is left to my six grandchildren.

Alastairlyon..I will Google to find your webinar. If your house is worth a million...very easy in our area..how can you pass on 175000 of the house to your children? Is there a ball park figure of how much it would cost to see a financial advisor ?

Thks for that overview Germanshepard. It was useful to look over my mother's recent estate and final accounts. Those tax figures are not detailed in same just the figure paid. Looking back over notes, I see only £100k of an allowance passed to my mother from my father but presumably that was the amount applicable when he died in 2010.

Vintagegirl, it looks as though your father may have used up part of his NRB (then as now £325k) with legacies (and/or gifts within seven years before he died) to people other than your mother (any gift to her was exempt from IHT), leaving only £100k of his NRB to be transferred to your mother. However, even the RNRB was not introduced until 2017 the spouse/civil partner of someone who died before then can inherit it if they are leaving a property in which they once lived to a direct descendant. I would suggest that you look closely at the accounts for your father’s estate, and his will if he left one, to see why your mother only inherited an allowance of £100k.

Wiser, in case the financial advisor doesn’t return - you don’t only pass on £175k of the house to direct descendants, to qualify for this additional IHT relief you have to pass on the entire property to them on death.

New rules are likely to come in tomorrow in the government's Autumn statement apparently. Wait and see!

It’s rumoured that there will be some tweaking of IHT, but any changes are unlikely to come into force until the next financial year.

I am a probate qualified chartered accountant.

When you die, your estate automatically has an allowance of £325,000 before any tax has to be paid. If your estate includes the family home which you are passing on to your children, then you gain an extra allowance which is the lower of the net value of the home, and £175,000. So if your home is worth more than £175,000 then you potentially have £500,000 of tax free estate.

If your spouse died before you, and left some or all of their estate to you, then you also gain the proportional amount of their estate - including the house - to pass on to your legatees.

When my father died, twenty-three years after my mother, we were able to use an extra 85% of her £325,000 allowance and all of the £175,000 family home allowance. So there was no inheritance tax to pay.

There are various other allowances too but those two are the ones which affect most people.

Daft question - I live with my partner in his house which will pass to his daughter on his death. I rent out my house which will pass to my daughter on my death. If he should pre-decease me I will return to my house. We do not have a civil partnership. I assume we will both be taxed separately as if single

Yes, you will. Marriage or civil partnership is worth money!

Posters will hopefully be comforted by having had the same responses from a solicitor, a financial advisor and a chartered accountant!

Thank you GSM.

Well said GSM. It’s clear that posters aren’t reading the thread and repeating the same figures and information ad nauseam.

Never mind, so long as people understand - and if you have all the relevant professionals saying the same thing it’s comforting!

Germanshepherdsmum

Yes, you will. Marriage or civil partnership is worth money!

Yes, indeed this is true. I attended a professional update course relating to IHT planning very recently and one of the presenters said sometimes the best tax planning advice he can give is to take a quick trip to the register office!!!