Interetance tax for children? (owner is a widow with kids)

le_loup

I think you need to listen to what people on here are telling you or go somewhere else for advice.
In the circumstances you describe there will be NO Inheritance Tax.

troubleinparadise

Person dies; estate is valued by adding together the values of all assets: bank accounts, value of house etc. Inheritance Tax is payable on the value of the assets above the current Nil Rate Band (NRB) threshold sum. Using the link you provided, HMRC says "Inheritance Tax will be due at 40 per cent on the amount over the nil rate band".

A single person's Nil Rate Band (NRB) IHT allowance is £325,000 - that means that 40% IHT is payable on the value of assets ABOVE £325,000.

Using your figure of the house being worth £380,000, that then exceeds the NRB IHT allowance by £55,000 (£380,000 - £325,000 = £55,000).

Therefore the tax payable is 40% of £55,000 = £22,000.

For a married couple, there is a benefit that if the first-deceased spouse did not use all their IHT allowance (perhaps all assets were left to the surviving spouse) then the unused portion can be added to the latest allowance, giving a possible IHT NRB threshold of £650,000.

You say that is the case with your story; the value of the house at £380,000 falls very far below the amount at which IHT becomes payable because the value of the estate does not exceed £650,000. In this case, dad can have assets of another £270,000 before Inheritance Tax will need to be paid.

Therefore no IHT to pay.

Does that make it clearer?

getmore4less

gemmaking wrote: »

I thought the threshold to pay Inheritance tax is :
40% (which would be paid by the sons) of the value of a propery..

£325,000 (6 April 2009 - 5 April 2015)
The children to pay 40% of £325,000+ (according to the below link) of the inherited property


Which will increase in 7-10 years.

Check it here:
http://www.hmrc.gov.uk/rates/iht-thresholds.htm

But also read here,

http://www.hmrc.gov.uk/inheritancetax/intro/transfer-threshold.htm

for a more complete understanding start here and dont stop following links

http://www.hmrc.gov.uk/inheritancetax/manage-estate/index.htm