Inheritance Tax

It depends on the value of your home as to whether or not IT would need to be paid. If it would, and you sign the house over to your son I think if you die within 7 years IT would still need to be paid, but I might be wrong.

If you hand the house over now HMRC will say you are living in someone else's home for which you should pay rent - and your son could be charged income tax on the amount of rent he should be receiving - and it has the be a realistic amount.
There are various ways to reduce inheritance tax involving trusts but you would need proper financial advice to decide if this was appropriate for you.

It is complicated. If your husband left everything to you then potentially if your estate includes your home which you leave to your son your estate could be valued at £1m before inheritance tax is due, but the value of your home is relevant. And I anticipate that a Labour government will seek to change the law so that many more people pay inheritance tax. I suggest you have your home valued and speak to your solicitor about your particular circumstances.

If you transfer your home to your son but continue to live there it will be counted as part of your estate unless you pay a full open market rent to him, so that’s unlikely to be a good tax planning option unless you can easily afford the rent - though if you need to go into a care home the financial assessment would vary likely assume that you still own your home -so not a good move.

I must admit I’ve been lax and left it too late. Thank you for your replies though.Ive no intention of passing my house on as I could need it for care later on. I’ve always been independent and looked after myself and would not expect my son to look after me if I couldn’t.
Thankyou

I believe that if your husband died less than 2 years ago, and you don't need all of the money he left to you, you could use a Deed of Variation to change his will so that some or all of it went to your son now. This would lower the value of your estate and reduce the amount of inheritance tax your son might need to pay after you die. Again you would need advice from either a financial advisor or solicitor who understands tax planning and the various implications before doing this

For anyone thinking of handing their house to their child and paying them rent to continue to live there, and I appreciate that the OP does not intend to this, think very carefully before you do it.

As GSM has said, the rent you pay has to be the market rent for the property you live in. Market rents can rise - there has been a surge in rents in the last 2 years and if you live much longer than you expected, the rent can soon start to consume a very large proportion of your income.

I was once sent to advise someone in this situation, who had made an arrangement like this in his late 70s, assuming, he would probably die in his mid 80s. When I visited him he was in his mid 90s and going strong.

Because the rental market in his area and for his type of property had boomed, the market rent he was now required to pay was more than his total monthly pension, adding up both state and private pensions. What is more, HMRC checked the rent each year and his accountant had to show that the rent being charged was the market rent and was being paid.

eddiecat, even if Allsorts’s husband died less than two years ago, using a deed of variation to give away some of the money she inherited from him is unwise unless he left her a very substantial amount of money which she would not need to fund her care in years to come. I expect her late husband’s estate has been wrapped up, and a variation of the will now would likely be viewed as deprivation of assets should care be needed. This type of arrangement is really for the wealthy, for whom an inheritance is bad news financially, and I assume Allsorts, like most, doesn’t fall into that category.