inheritance tax

chopperpete

Hi all, my mother who is a widow (since 1976) is now sorting out her will and wondered whsat the amount she can leave without the government getting their hands on it. I was under the impression because she is a widow it was 2 lots of 300K = 600K. But then someone said that the new tory government has increased it to 1 million. can anyone please help

kidmugsy

2x£325k = £650k, if your father left everything to her when he died.


Over the next few years there will be an added amount if she leaves her house to direct descendants (children - including step-children, adopted children and foster children), grandchildren and so on. That amount rises from £100k to £175k by (I think) 2020. There's an equal amount available, if I understand correctly, attributed to your father's share of the house.

So £650k + 2x£175k = £1M.

xylophone

See http://findlaw.co.uk/law/tax/taxes/inheritance_tax_taxes/9485.html

With regard to the position on the family home see

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

Your mother would be well advised to consult a solicitor?

ellie99

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mania112

ellie99 wrote: »

Not if your father died in 1976.

Your mother's allowance is £325k. The amount of allowance she can use from your father is the amount which was applicable in the year he died.
Looking at the government website

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

that amount was £15k.

So she could have an allowance of £340k.

I don't know about the new house rules which are being introduced though.

This is incorrect, and the evidence is that the suriviving spouse 'inherits' a percentage of an IHT allowance.

In 1976 if Mr. used no allowance, Mrs. will have 100% - currently this means £325k, in the future it may mean something else, but it will always be 100% (plus her own allowance too of course)

gibson1

chopperpete wrote: »

Hi all, my mother who is a widow (since 1976) is now sorting out her will and wondered whsat the amount she can leave without the government getting their hands on it. I was under the impression because she is a widow it was 2 lots of 300K = 600K. But then someone said that the new tory government has increased it to 1 million. can anyone please help

As its 4 decades ago, you'd need to double check with a professional as to what rules apply to her.
I believe deaths before 1975 have a different rule, so the current one should apply, but do double check.

Did your father leave everything to her? If so, then generally speaking his tax free allowance should combine with hers, so £325K times two. But if he made other gifts, then that is held into account against the tax free allowance.


The government apparently is talking about revising IHT, however governments talk a lot about what they would like to do, or are going to do, then nothing gets done. I wouldn't plan your tax based around what the Tory government says they will do in 5 years.

Probably the best way for your Mum to avoid IHT, would be to give everything to you. The IHT tax rate would be zero in 7 years, and is on a sliding scale in the meantime. That doesn't apply to her home if she continues to live in it though.

atush

Do check deprivation of assets rules.

If her health isn't good, and she is likely to need care, you have to step very carefully.

kidmugsy

What is all this "the new tory government", and "what the Tory government says they will do"? We have a government. It's rather well known that it is Conservative, just as its predecessor was the Coalition, and its was Labour. By all means be specific in cases of doubt, so chatter about a Corbyn government or a Burnham government makes sense. But telling us what we already know seems rather odd. Are you sober?

ellie99

mania112 wrote: »

This is incorrect, and the evidence is that the suriviving spouse 'inherits' a percentage of an IHT allowance.

In 1976 if Mr. used no allowance, Mrs. will have 100% - currently this means £325k, in the future it may mean something else, but it will always be 100% (plus her own allowance too of course)

Apologies, I have deleted my post.

That was how I had understood it having read a previous thread on here. (and I find some of the government website hard to follow, if not sometimes ambiguous).