Inheritance Tax: Save £100,000s with simple advanced planning Article Discussion

hardpressed

I've put this on another thread but I think it might be more appropriate here. If I understand correctly what I read on this thread the nil rate band is £300,000 irrespective of when the first person died. Now I recently asked HMRC what the nil rate band would be for someone who died in 1989 and was told £108,000. I assume HMRC gave me the right answer but now I'm not so sure. Can anyone clarify it for me, please?

jem16

It depends on your reason for asking the question I suppose. HMRC probably gave you the right answer if all you wanted to know was what was the nil rate band at that time.

If you are asking with regards that unused nil rate band now being used by a surviving spouse then it is £300k.

sloughflint

jem16 wrote: »

If you are asking with regards that unused nil rate band now being used by a surviving spouse then it is £300k.

£312k now......

hardpressed

I asked them what the the unused rate for the surviving spouse would be and that's what they told me. I'll try to phone them again tomorrow and check. Thanks.

sloughflint

hardpressed wrote: »

I've put this on another thread but I think it might be more appropriate here. If I understand correctly what I read on this thread the nil rate band is £300,000 irrespective of when the first person died. Now I recently asked HMRC what the nil rate band would be for someone who died in 1989 and was told £108,000. I assume HMRC gave me the right answer but now I'm not so sure. Can anyone clarify it for me, please?

Hardpressed,I've read your post again now and HMRC answered you correctly ( except , it was £118 000 according to this)

I wonder if you have understood the principle:

The second spouse to die is entitled to claim the unused proportion of his/her spouse's NRB.
So if the second spouse died during this tax year ( £ 312 000) and his/her spouse had not used up any of their NRB then their NRB will be 200% of the single allowance.
So the date of first death and NRB of the time is irrelevant.

Examples in section 20 of here:
http://www.hmrc.gov.uk/cto/iht/tnrb-guidance.pdf

hardpressed

I've just phoned the IT helpline and they confirmed what all you good people have told me, their advisor who I spoke to a couple of weeks ago did give me the wrong info. The moral of this is don't trust the officials ask MSE!

sloughflint

LOL. But don't trust MSE either!

ian2deep_2

I’m new to this forum, so please excuse me if someone has already discussed these questions before.

My mother died in January 2007 leaving my 87 year old father a widower. The Expression of Wishes with her Will stated that her estate should be put into a NRB trust with my father as main beneficiary for the rest of his life. The house was owned by them as Tenants in Common and the total of my mother’s estate (including half the house value) came in below the £285k IHT threshold current at the time.

I have drawn all the assets together into one high-interest savings account (paying interest into my father’s bank account to supplement his income) with the intention of setting up the trust.

A financial adviser I know previously advised me that the if the trust included half of the house with my mother’s savings, then the Social Services would have difficulty selling the house to pay nursing home fees –should this situation ever occur.

As the dust now seems to have settled after the changes to IHT in the Finance Act, can you tell me if it is still worth setting up the trust or would it be more beneficial to have my mother’s allowance added to my father’s when the time comes?

If the Trust is now not suitable, does the Will need to be altered by Deed of Variation to remove my mother’s wish?

Does the arrangement of paying interest into my father’s account leave him liable for paying any extra tax?

If appropriate, how do I set up the Trust?

joemarch1

Hi All

I have read through these many posts and i understand the general gist of inheritance tax.

My grandad is quite good with his cash, he should just about fall below the IHT threshold, however......

He decided to buy me (still in his name) a house this week at auction, 100k in total, my share of the inheritance between two of us, but the same week he has fallen quite ill, and we have been organising the will together.

My questions are these:

The house was purchased for 100k, after i finish a few jobs on it I believe it will be worth around 200k at least, this creates the problem, is the house valued at what he paid for it or at market value?

If its market value and i'm the person who brought it the standard does this have any baring on the matter to my benefit?

My grandad then decided that he would then just go to the bank and withdraw 100k cash and put it away in a safe place! crazy. But he feels it will solve the problem, would it? or would it have to be proved further down the line where it went?

Lastly, if he pulls through the opperation, he thought about signing half the house over to me, and I will pay rent on the other half, would this leave me in a better position for the inheritace tax?

Any suggestios please, because its driving us both mad, especially since he spent his whole life avoiding the tax man!

localhero

Hi Joemarch1,

The information you have provided is very unclear.

What does your granddad's estate consist of please and what are the assets worth?

Is he a widower?

Also what is he trying to achieve in the way he distributes his estate - ie does he want it split equally between you and 1 other person?

I assume he owns a property already, but he's now bought a second one for £100k which he wants to give to you?

What does he want to do with the other £100k?