Nil rate transfer for spouse

mikey6

Briefly,
My mother has passed away recently and rather than getting the double IHT relief, we were expecting, is seems there will be no spouse relief as my father died in the 1960's - his estate passed to my mum, but just exceeded the then estate tax limit of £5000 and it seems there was no retrospective spouse transfers.

Does anyone have any experience of this? or any advice?

It really doesn't seem fair that if my dad had died recently there would be no tax to pay, but as my mother was left to struggle for 40 years to bring up kids on her own there is IHT due on an estate that only slightly exceeds her allowance.
Many Thanks

getmore4less

If it only slightly exceeds then it won't be much tax.

Look very carefull at the valuations and allowable expences.

Not a lot you can do there was no spouse exemption at that time.

SeniorSam

mikey6 wrote: »

Briefly,
My mother has passed away recently and rather than getting the double IHT relief, we were expecting, is seems there will be no spouse relief as my father died in the 1960's - his estate passed to my mum, but just exceeded the then estate tax limit of £5000 and it seems there was no retrospective spouse transfers.

Does anyone have any experience of this? or any advice?

It really doesn't seem fair that if my dad had died recently there would be no tax to pay, but as my mother was left to struggle for 40 years to bring up kids on her own there is IHT due on an estate that only slightly exceeds her allowance.
Many Thanks

This does not sound right.

If you father passed his total estate to your mother, then his full IHT relief at the time your mother diied is allowable as well as your mother's allowance.

Therefore there should be an allowance of £325,000 x 2 = £650,000 before any tax is payable. The date your father died is not applicable.

The only way this could have altered,is if your father had made gifts when he died, thereby reducig the % of his gifting allowance.

Do you have any more details on why they say it is not so? Who has told you this?

Sam

Mojisola

mikey6 wrote: »

my father died in the 1960's

SeniorSam wrote: »

This does not sound right.

If you father passed his total estate to your motrher, then his full IHT relief at the time your mother diied is allowable as well as your mother's allowance.

Therefore there should be an allowance of £325,000 x 2 = £650,000 before any tax is payable.

Not with the first death being in the 1960s.

SeniorSam

This was part of an article in the Telgraph some time ago

Even if you were widowed as far back as the 1950s you will still be able to use today's married couple allowance in full (minus, of course, the value of any gifts made at the time). This will be a real benefit for families in this position.

As far as I am aware, the allowance continues indefinately to the spouse.
Sam

I have just telephoned the Tax offce and they have confirmed that the date of the first death ir irrelevant. All of the nil rate band allowance if all assets passed to the spouse can be transferred and it does not matter how mch was passed on.

getmore4less

There was no spouse allowance.

the IHT402 forms are quite clear.

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

Spouse exemption where the first spouse died before
22 March 1972
�
Under Estate Duty there was no spouse exemption.
All legacies and assets passing under Will or intestacy or by
survivorship, irrespective of the recipient and value should
be included in box 12

So as long as that box is filled in correctly it should work out the right answer.

mikey6

Thanks for all the quick replies, it looks like we will have to pay up.

Estate guestimate will exceed single allowance by approx 100k, so would be well within normal spouse transfer rate, if he had died later- unfortunately looks like 40k less allowed expenses going to the taxman

Mojisola

mikey6 wrote: »

Thanks for all the quick replies, it looks like we will have to pay up.

Estate guestimate will exceed single allowance by approx 100k, so would be well within normal spouse transfer rate, if he had died later- unfortunately looks like 40k less allowed expenses going to the taxman

Have you thought about donating some of it to a charity?
https://www.gov.uk/inheritance-tax/giving-to-charity-to-reduce-an-inheritance-tax-bill

I'd prefer a lump sum to go to a charity that my parent supported than just into general taxation.

SeniorSam

IT GETS HARDER. Having retired a few years ago, it seems I am a little out of date, but this IHT allowance on earlier deaths, although there are fewer and fewer now, is not so easy to calculate.

I phoned again to the Revenue and obained another answer after a long conversation and the helpful guy having to refer to colleagues.

As an example from November 1954, the allowance was £3000 and if the first death assets were say £1500 passing to the spouse, then 50% of todays allowance would be exempt. That is as explained to me.

Earlier amounts and dates also differ, but it is rather complex and certainly needs full details looking up.

Unfortunately the Revenue say they do not have anything that can be seen on the Web, so further examination is necessary, but some allowance may be avaiulable in the OP's case.

It is not as clear as has previously been given to understand and although there are fewer instances, the Revenue should make this clear to the public.

Apologies for me passing on information that was not correctly given to me by someone at the Tax office.

Sam

getmore4less

The IHT402 covers most cases and there is another page that has the details of the allowances and dates

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

nom_de_plume

mikey6 wrote: »

Briefly,
my father died in the 1960's - his estate passed to my mum, but just exceeded the then estate tax limit of £5000

Have you checked that any tax was paid. Assuming it was then my understanding is there will be no transferable allowance. I dealt with a similar situation on a larger estate that would have dearly benefited from a double allowance but sadly didn't qualify.