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Inheritance Tax. Last budget.
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Jake'sGran
Posts: 3,269 Forumite
On the money programme on radio 4 today at mid-day the subject of the change in the rules from last year's budget came up, i.e. whereby if a person died and left £300K or more there would be no IT to pay as it could be added to any monies the husband/wife had. They mentioned today that this only worked if the entire estate was left to the spouse and that there would still be IT to pay if there were bequests to others out of the £300k.
Did anyone else hear this programme and have I got it right?
Did anyone else hear this programme and have I got it right?
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Comments
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Jake's Gran,I missed this post yesterday.
Yes there was an announcement last October but not official yet ( still going through).
A single person's Nil rate band is now £312 000.
If within a couple, the first person to die leaves their entire estate to their spouse, then on their death, their NRB is twice the single NRB at time of death.( £312k this year)
To expand a little:
if first to die leaves 100% to spouse, second to die's NRB is 200% of single NRB
if first to die leaves only 40% to spouse, second to die's NRB is 140% of single NRB
if first to die leaves only 80% to spouse, second to die's NRB is 180% of single NRB0 -
Sloughflint, our arrangement would be something like the middle of your three possibilities and will mean (if I die first-most likely scenario) that my husband will be OK as he would not have 140% of single NRB. Thank you.0
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The single NRBs are 312k, 325k and 350k over the next 3 years.
So as long as his estate wouldn't exceed 436.8k, 455k and 490k etc then he would have no IHT liability.
By the way, if you have got 'life Interest' Wills, I can't quite remember whether the whole value of the house would be included in your husband's Estate or not. I'm rather rusty with it all.0 -
Jake's Gran, I've remembered. The value of the whole house would be counted for IHT purposes. It's to do with "interest in possession". ( Sometime post 1980's, HMRC successfully challenged the fact that beforehand the half share of the first spouse to die wasn't counted for IHT purposes)sloughflint wrote: »
By the way, if you have got 'life Interest' Wills, I can't quite remember whether the whole value of the house would be included in your husband's Estate or not. I'm rather rusty with it all.
So that's why these LI Wills stopped being IHT efficient until last October.0 -
sloughflint wrote: »Jake's Gran, I've remembered. The value of the whole house would be counted for IHT purposes. It's to do with "interest in possession". ( Sometime post 1980's, HMRC successfully challenged the fact that beforehand the half share of the first spouse to die wasn't counted for IHT purposes)
So that's why these LI Wills stopped being IHT efficient until last October.
I am sorry to seem so thick but does LI mean that they way we have made our wills i.e. that the surviving spouse has the right to remain in it even though half of it's value has been willed away BUT the estate pf the surviving spouse is considered to include the full value of the property? This question is asked just to clarify for myself and be able to inform my daughter as, even with the full value of the house, my spouse's assets will not exceed the figures you have mentioned.0 -
Jake's Gran, you don't seem thick at all.
I might not have used the correct term but I recognised your Wills as being the same as a Will that I was executor of and so what I said in the post above yours counts in this setup. The value of the whole house would be used in calculating the size of your husband's estate for inheritance tax purposes.
I'm not sure on the name of the Wills so ignore my use of LI although it is the life interest ( ie right to remain) aspect that results in the use of the whole house for calculations.0 -
Sloughflint, Some people are so kind on here - thank you.0
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Hi - are the proposed bands of £325000 and £350000 just proposals or are they set in law?sloughflint wrote: »The single NRBs are 312k, 325k and 350k over the next 3 years.
So as long as his estate wouldn't exceed 436.8k, 455k and 490k etc then he would have no IHT liability.
By the way, if you have got 'life Interest' Wills, I can't quite remember whether the whole value of the house would be included in your husband's Estate or not. I'm rather rusty with it all.Keep the Faith:cool:0 -
Hi Whu,
The increases in the IHT threshold up to £350,000 were announced whilst Gordon Brown was chancellor and were just repeated by the current chancellor in the last budget.
There's no guarantee they will be honoured (though politically I find it unlikely they would be revised downwards).
A new government generally honours budget commitments made by previous governments, though the conservatives have mooted raising the threshold to £1m.[FONT="]Public wealth warning![/FONT][FONT="] It's not compulsory for solicitors or Willwriters to pass an exam in writing Wills - probably the most important thing you’ll ever sign.[/FONT]
[FONT="]Membership of the Institute of Professional Willwriters is acquired by passing an entrance exam and complying with an OFT endorsed code of practice, and I declare myself a member.[/FONT]0
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