I have a very basic question but can fill in more details as I go if it helps.
Short version - am I right in thinking inheritance tax is 40% on anything above £425,000?
I’m supposed to be helping a friend with paperwork after she lost her second parent, I thought I might be able to help because I did it for mum but mum paid no tax because she inherited from her husband (my dad).
If it’s really 40% then it scuppers my friend’s chance of buying her share of the family home from her siblings. But there is this transferable nil rate band thing between spouses which neither of us can understand from Internet info.
We put the estate amount into the Which? IHT calculator and that seems to bear out my assumption.
TIA for any help.
Inheritance tax query
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- Lemon Half
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Re: Inheritance tax query
The basic threshold is £325,000. If the first spouse to die didn't use theirs (i.e. left everything to second spouse), then that can be added as well making £650,000.
If there is a house being left to offspring, then the value of that can be added as well, up to a limit of £175,000 (per spouse). This makes it possible to have a tax free allowance of up to £1million.
More details needed. Friend really need to consult a solicitor of course.
IANAL.
Scott.
If there is a house being left to offspring, then the value of that can be added as well, up to a limit of £175,000 (per spouse). This makes it possible to have a tax free allowance of up to £1million.
More details needed. Friend really need to consult a solicitor of course.
IANAL.
Scott.
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- Lemon Slice
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Re: Inheritance tax query
Thank you Scott
That’s what I thought - my late father used to fret about IHT a lot but the Which calculator doesn’t seem to factor in the nil rate band.
She was hoping to avoid using a solicitor. The main thing at the moment is for her to get an estimate of what she will get to see if she can pay her siblings to buy their shares of the house.
I actually wonder if it would be cheaper for her to have a quick meeting with an accountant or financial adviser to calculate what she is likely to receive.
Thank you for clearing up the nil rate band, much appreciated.
That’s what I thought - my late father used to fret about IHT a lot but the Which calculator doesn’t seem to factor in the nil rate band.
She was hoping to avoid using a solicitor. The main thing at the moment is for her to get an estimate of what she will get to see if she can pay her siblings to buy their shares of the house.
I actually wonder if it would be cheaper for her to have a quick meeting with an accountant or financial adviser to calculate what she is likely to receive.
Thank you for clearing up the nil rate band, much appreciated.
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- Lemon Quarter
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Re: Inheritance tax query
The nil rate band only kicked in April 2017 - but it has to be property left to direct descendants.my late father used to fret about IHT a lot
T7
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- Lemon Quarter
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Re: Inheritance tax query
SIPPs can be passed on without attracting IHT. DB schemes stop for second partner of course.
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- Lemon Half
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Re: Inheritance tax query
Both the transferable nil rate band and the RNRB are effectively retrospective if my drift is got. An overview is available below.terminal7 wrote:The nil rate band only kicked in April 2017 - but it has to be property left to direct descendants.my late father used to fret about IHT a lot
T7
https://www.gov.uk/guidance/inheritance ... -threshold
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- Lemon Slice
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Re: Inheritance tax query
Thanks, I’ll send that link to my friend
It doesn’t come out the same as the Which calculator so she might be able to be bake to buy her siblings out, she’s very fond of the idea of raising her kids where she was raised.
It doesn’t come out the same as the Which calculator so she might be able to be bake to buy her siblings out, she’s very fond of the idea of raising her kids where she was raised.
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- Lemon Quarter
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Re: Inheritance tax query
No.Sunnypad wrote:I have a very basic question but can fill in more details as I go if it helps.
Short version - am I right in thinking inheritance tax is 40% on anything above £425,000?
The current Nil Rate Band (NRB) is £325k per person plus the Residence allowance (RNRB) if there is a qualifying residence (which it sounds like their might be in this case).
I really don't mean to be rude here, but if you are struggling to understand that part of it then you really should seek professional advice. Also if it does go wrong then you might harm your friendship.Sunnypad wrote: If it’s really 40% then it scuppers my friend’s chance of buying her share of the family home from her siblings. But there is this transferable nil rate band thing between spouses which neither of us can understand from Internet info.
We had a horrific percentage quote from the in-laws' solicitor (who also prepared their Trust-laden will). However as we'd had PoA we had a complete list of all their assets and approximate values at death, which your friend might be able to collate. We sent this list to a couple of solicitors and got fixed quotes for dealing with it which were less than 10% of the original quote.
Paul
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- Lemon Slice
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Re: Inheritance tax query
Paul
As I said, she is seeking advice, she was just asking me because the Which calculator shocked her.
I’m helping her dig out paperwork but the comment you made about the fixed fee might be useful to me, as mum is keeping a proper list of her stuff for when that day comes.
As I said, she is seeking advice, she was just asking me because the Which calculator shocked her.
I’m helping her dig out paperwork but the comment you made about the fixed fee might be useful to me, as mum is keeping a proper list of her stuff for when that day comes.