Inheritance tax query - who have we inherited from?

seafarer82

Hi, the shares are correct. Our grandparents wanted their children to inherit their shares of the house rather than my aunt's partner, therefore the wills state that if our aunt died while living at the property then their shares should go in full to our father or his children. She would only have owned half if the property was sold while she was alive. Hope that clarifies things.

Hitting

If I make a gift in excess of my Nil Rate Band and die next day, does the value of the gift reduce my Nil Rate Band by the value of the gift or do the beneficiaries of the gift pay Iht at 40% of value of gift?

getmore4less

Hitting wrote: »

If I make a gift in excess of my Nil Rate Band and die next day, does the value of the gift reduce my Nil Rate Band by the value of the gift or do the beneficiaries of the gift pay Iht at 40% of value of gift?

gifts use up the nil rate band oldest PET gift first.

If the estate can't pay the tax the beneficiaries might need to pay, it is not always possible for HMRC to enforce this.

Hitting

If estate is willed to beneficiaries,and estate value is in excess of nil rate band,hence IHT is due,who pays this tax? I thought it was beneficiaries, but Am I wrong, is it the estate(trustees) who pay this tax?

Mojisola

Hitting wrote: »

If estate is willed to beneficiaries,and estate value is in excess of nil rate band,hence IHT is due,who pays this tax? I thought it was beneficiaries, but Am I wrong, is it the estate(trustees) who pay this tax?

IHT has to be paid before any beneficiaries are given their inheritance. It's a tax on the estate, paid by the executors.

Hitting

Thank you,

Therefore should present no difficulty to the beneficiaries,if IHT comes from deceased estate,arranged by executors/trustees,which may mean selling investments to raise cash!

On subject of reducing IHT liability, is there any differences/ drawbacks from gifting beneficiaries whilst donor is alive rather than putting gifts into a trust until death,acknowledging that both would be PETs,but first option would benefit benificiaries immediately whilst other would only do this on death of donor.

getmore4less

Hitting wrote: »

Thank you,

Therefore should present no difficulty to the beneficiaries,if IHT comes from deceased estate,arranged by executors/trustees,which may mean selling investments to raise cash!

On subject of reducing IHT liability, is there any differences/ drawbacks from gifting beneficiaries whilst donor is alive rather than putting gifts into a trust until death,acknowledging that both would be PETs,but first option would benefit benificiaries immediately whilst other would only do this on death of donor.

Deprivation of assets springs to mind not strickly a gift/trust issue but needs thinking about.

Hitting

If a will is made out for a person with an estate valued greater than Nil Rate Band and the executor is the spouse and also the trustee,the benificiaries being the spouse and son.

If the estate is say £450k and divided equally between spouse and son,presumably IHT does not apply for spouse but what is position wrt son?

If whole estate was to go directly to spouse,presumably no IHT applies; Can the spouse then gift the son with say £100k,becoming a PET from the enlarged spouses estate?

Hitting

If a person dies within 7 years of making a gift (PET), I believe the threshold(nil rate band) is reduced by the amount of the gift, but is this amount reduced if say the donor dies after say 6years, or does the relief apply to the tax only in some way?

getmore4less

Hitting wrote: »

If a person dies within 7 years of making a gift (PET), I believe the threshold(nil rate band) is reduced by the amount of the gift, but is this amount reduced if say the donor dies after say 6years, or does the relief apply to the tax only in some way?

Taper relief only applies to gifts in excess of the nil rate band.

Gifts use up the band oldest first.