Inheritance Tax

zogg

My dad was visited today by a financial adviser from the bank. The lady told him that my mothers half of the Inheritance which was left to my dad can be used by him effectively doubling his allowance from 300 to 600k My mother died 13 years ago. Surely this cannot be right ? Thanks.

whu

That is correct although now the individuals allowance is £325000 each so your dad would have £650000 as an allowance this year - the basic rule is that the deceased's spouse's allowance passes to the living spouse in these circumstances
UPDATE - Check with HMRC that the allowaces relate to the current levels although I am fairly sure they do

zogg

Thank you very much for quick response. I thought that the figures at the time of mums death may have been used as opposed to todays.

ohmsoft

They do definately relate to current levels - it works as a percentage of the unused allowance at death applied to the current allowance. So if no gifts were made it would be 100% of the current allowance.

This applies up to maximum of 100% of the nil rate (ie can never be more than doubled) in the case of remarriage etc

John_Pierpoint

Yes your father's nil rate band will (likely) increase each year until he dies and so will the value of his late life's unused nil rate band.

HOWEVER his personal representatives will have to be able to prove what happened at the time of his wife's death on the official claim form. They will also have to complete the big IHT400 form detailing all the ins and out of his estate and any IHT liable transactions he has made prior to death.
(You could phone the help line and get the pack of forms, just to see what you are letting yourselves in for)
Now is the time to make sure all the paper work makes sense - dad won't be around to help!