Inheritance Tax

Richie23_2

Hi,

what is the current inheritance tax if the last surviving parent dies?

Thanks

CLAPTON

The IHT allowance is 312,000.

If however, the spouse of the deceased is already dead and left either no inheritance or only to the deceased then that allowance can be used; so the estate will then have a 624,000 IHT free allowance

sloughflint

CLAPTON wrote: »

The IHT allowance is 312,000.

If however, the spouse of the deceased is already dead and left either no inheritance or only to the deceased then that allowance can be used; so the estate will then have a 624,000 IHT free allowance

Would it be worth clarifying that £624 000 is merely an upper limit?
The second spouse can claim the unused allowance of the predeceased spouse.

Above hard to put clearly....
E.g. if first spouse passed on 60% of estate to his/her spouse then his/her allowance in turn will be 160% of the single allowance ie 160% of £312 000 this financial year.

edit: I knew I was getting tied up with how to put it clearly into words so here is the HMRC version with link:

Transfers of unused nil rate bands

In his pre-budget report, the Chancellor of the Exchequer announced that for deaths on or after 9 October 2007 it will be possible for spouses and civil partners to transfer their unused Inheritance Tax nil rate bands.

• More information on transfer of unused nil rate bands

Richie23_2

thanks both, so if my nan died before 9th october 2007 then inheritance tax would only be £312k but if she died afterwards then £624k?

Much appreciated!

sloughflint

Richie23 wrote: »

thanks both, so if my nan died before 9th october 2007 then inheritance tax would only be £312k but if she died afterwards then £624k?

Much appreciated!

Not quite.
If your Nan ( second spouse to die?) died before that date, her allowance would have been whatever the single rate was for her year of death.(http://www.hmrc.gov.uk/cto/customerguide/page15.htm)

If your nan died after that date, her allowance would depend on how much ( proportion) was passed to her from her husband's estate.It would be between 100% and 200% of either £300 000 ( 07/08)or £312 000 (08/09)

eg, if she died September 2007

---

>allowance £300 000
if she died November 2007 and husband passed 100%of his estate to her

---

> allowance £600 000
If she died November 2007 and husband passed 50% of his estate to her

---

> allowance £ 450 000
..........
Thinking about your post a bit more, it's unlikely you'd be asking now about your nan's allowance if she died a fair while ago.
So perhaps she predeceased your grandfather and you are wondering what his allowance would be; in which case the 9/10/07 date is irrelevant.
His allowance will be between 100% and 200% of the single allowance at the time of his death ( currently £312 000, £325 000 next year and £350 000 the year after)
Hope that makes sense.