Using second unused IHT allowance

enthusiasticsaver

My mum has received some advice on IHT regarding her estate which was quite large but she has been gifting large sums of money to myself and my sister and brother ever since my dad died in 1993. She is now 79 and sold her portfolio of shares about 2 years ago and gifted it to me, my sister and brother so I know as long as she lives for a further 5 years then this will be free of IHT. 12 years ago she also bought a second property in our names which the whole family use and she pays rent on it when she uses it so it is not a gift with reservation so this is now outside the 7 year exemption period.


Her estate now sits at around 500k including a half share in a property in London with her second husband and she receives a large monthly pension from my dad's pension which will more than cover any nursing home fees etc if she ends up having to go into one and she has been told that because all my dads estate went to her in 1993 we can use his allowance when she dies along with hers so effectively doubling the £325k allowance.


Has anyone had any experience of doing that?

purdyoaten

Several times. There are also many on here who have great knowledge. The form is:

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/373532/IHT402.pdf

Is the half share with her second husband tenants in common or as joint tenants? Big difference!

xylophone

https://www.gov.uk/government/publications/rates-and-allowances-inheritance-tax-thresholds/rates-and-allowances-inheritance-tax-thresholds

The nil rate band in 1993 was £150,000 see above.

http://www.hmrc.gov.uk/manuals/ihtmanual/ihtm43020.htm

http://www.hmrc.gov.uk/manuals/ihtmanual/ihtm43034.htm

for how to calculate transferable nil rate band.

getmore4less

one thing to watch is you can only uplift a nill rate upto 100%

If the new hubby pops his clogs you need to use his allowance if you can so make sure he has assets of 325 to use up.

enthusiasticsaver

purdyoaten wrote: »

Several times. There are also many on here who have great knowledge. The form is:

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/373532/IHT402.pdf

Is the half share with her second husband tenants in common or as joint tenants? Big difference!

The half share is tenants in common, split down the middle and mum's will dictates her half goes to me and my siblings and her 2nd husband's will dictates his half goes to his daughters from his first marriage as he was also a widower. Each has a lifetime interest in the other half so they do not need to move out if one of them dies.

enthusiasticsaver

getmore4less wrote: »

one thing to watch is you can only uplift a nill rate upto 100%

If the new hubby pops his clogs you need to use his allowance if you can so make sure he has assets of 325 to use up.

They have tried to keep their finances as separately as possible as his assets will go to his daughters from his first marriage so they will use up his IHT allowance. We will not be touching his estate. He moved in with my mum after they married and officially bought half her property by transferring half the value to her.