Iht

Gnittih

Situation...Single person with Estate £450k makes gift of £50k to A.N Other in 2015, that single person dies in 2020 and his Estate has grown to £500k,...Is there any IHT due on his estate in expectation that the NRB will rise to £500k in 2020?

bowlhead99

If I'm reading it right, you're saying the estate at death uses up the entire nil rate band. And at that point there was also a potentially-exempt transfer of £50k from a few years ago which had not yet become fully exempt because not enough time had elapsed for its value for IHT to taper away to nothing.

Assuming there's nothing else you're not telling us (e.g. deceased person had acquired a spouse before 2020 or some of the assets they owned were not counted for OUR purposes), then yes there would be some IHT.

Gnittih

So is it IHT to pay fter tapered relief is taken into account, and is nil,based on 2020 £500k exemption?

No. There are no hidden assets or other!

grey_gym_sock

more precisely, there will be 2 kinds of IHT allowances, a general allowance of £325k and a home-related allowance of £175k. let's assume both are applicable.

since, there is a PET of £50k, which didn't become exempt, due to not surviving for 7 years, the general allowance is reduced by £50k to £275k. that leaves a total of £450k of allowances available, and £500k of assets in the estate, so 40% is payable on £50k.

tapering only applies when PETs exceed the £325k allowance. in that case, the available general allowance is reduced from £325k to nil, and the part of the PETs in excess of £325k is taxed but at tapered rates.

Gnittih

The original value of estate includes £175k house value,this being the case, does not £500k allowance apply in 2020, hence no IHT due?

masonic

Gnittih wrote: »

The original value of estate includes £175k house value,this being the case, does not £500k allowance apply in 2020, hence no IHT due?

Not if the value of the estate plus money gifted in 2015 adds up to £550k.

Gnittih

No,...it doesn't!

xylophone

The "family home" allowance is available if it is willed to a direct descendant.

https://www.gov.uk/government/publications/inheritance-tax-main-residence-nil-rate-band-and-the-existing-nil-rate-band/inheritance-tax-main-residence-nil-rate-band-and-the-existing-nil-rate-band

http://taxaid.org.uk/guides/information/other-taxes-you-may-need-to-know-about/inheritance-tax/828-2/taper-relief-for-lifetime-gifts
may be of interest.

grey_gym_sock

if you mean that there is £50k gift in 2015, and £450k estate left in 2020, making a total of £500k, then there is indeed no IHT.

bowlhead99

grey_gym_sock wrote: »

if you mean that there is £50k gift in 2015, and £450k estate left in 2020, making a total of £500k, then there is indeed no IHT.

But he didn't mean that there was £450k estate left in 2020, because he explicitly said that he had made a gift and his estate had grown to 500k, which is more than £450k.