Inheritance tax allowance - Grandparents - Surviving Grandad

McAnniee

Hi,

My Nan (Grandmother) died in 1999 and my Grandad is still alive today (To be 100% clear: they were married). Nan's will left everything (Edited to add: including her element of their joint House) to my Grandad (with other contingencies but they don't apply since he was still alive).

I understand Inheritance Tax thresholds can be inherited from one Spouse to the other.

Does this apply if the Spouse died in 1999 (i.e. does it apply 18 years ago). My Grandad is now Very Old,

My Mum (Grandparents daughter - not very computer literate hence me asking - I want to be able to reassure if possible!) is concerned that his estate (their joint owned house which has now passed to him, approx. value £350k - my estimate) and savings etc (£100k)) will be subject to the £325k inheritance tax threshold.

Owain_Moneysaver

It can apply, whether it does apply in your case may depend on the terms of the Grandma's Will (which can be obtained from the probate registry if probate was granted) and the exact form of ownership of the house.

You probably should get a solicitor to check this for you.

uknick

In your situation any unused element of the NRB for your nan can be used by your granddad's estate.

Plus, if I read it correctly that your granddad has a house, there will be an element of the new nil rate band for his residence. This is £100k for the 2017 tax year and increase over the next 4 years to £175k by tax year 2020.

McAnniee

Owain_Moneysaver wrote: »

It can apply, whether it does apply in your case may depend on the terms of the Grandma's Will (which can be obtained from the probate registry if probate was granted) and the exact form of ownership of the house.

You probably should get a solicitor to check this for you.

The terms of Grandma's will in this case were that everything would be left to my Grandad, who is now still alive. He has inherited any joint component of savings etc. and now owns 'their' house in his sole name.

xylophone

Plus, if I read it correctly that your granddad has a house, there will be an element of the new nil rate band for his residence.

when a residence is passed on death 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

McAnniee

uknick wrote: »

In your situation any unused element of the NRB for your nan can be used by your granddad's estate.

Plus, if I read it correctly that your granddad has a house, there will be an element of the new nil rate band for his residence. This is £100k for the 2017 tax year and increase over the next 4 years to £175k by tax year 2020.

Can you simplify, cos I'm stupid about financial things? What does the 100k apply to?

uknick

Xylophone, you're correct to point this out. I assumed the granddad would pass the estate to one of his direct descendants, but I should know better and never assume anything with regard to tax

uknick

McAnniee

Read the link Xylophone posted.

It's about the government introducing an extra allowance for the deceased person's residence if the residence is passed to direct descendants of the deceased.

It means a person has £325k IHT allowance plus up to £175k for their home giving a total of £500k exempt from IHT.

The headline at the time was one might have an estate worth up to £1m and not pay any IHT upon the death of the surviving spouse.

McAnniee

uknick wrote: »

Xylophone, you're correct to point this out. I assumed the granddad would pass the estate to one of his direct descendants, but I should know better and never assume anything with regard to tax

In this situation the "rest" of his Estate would pass to my Mum who is an only child (and the only surviving 'first degree' relative)

He has willed the house specifically to me, the grandchild. (I am also an only child)

But I understand regardless of the details of who things are left to, that IHT still applies.

Keep_pedalling

McAnniee wrote: »

In this situation the "rest" of his Estate would pass to my Mum who is an only child (and the only surviving 'first degree' relative)

He has willed the house specifically to me, the grandchild. (I am also an only child)

But I understand regardless of the details of who things are left to, that IHT still applies.

Not if the figures you quoted in your original post are correct, he currently has a £650 nil rate band and an estate worth apox £450k.

McAnniee

Keep_pedalling wrote: »

Not if the figures you quoted in your original post are correct, he currently has a £650 nil rate band and an estate worth apox £450k.

Sorry, what I meant that "IHT still applies" was that the same rules and thresholds are applied regardless of whether the estate is left to a grandchild, the local Cats' Charity, or whatever. (Except maybe in the specific case of the direct descendant)

The estate will definitely not be worth more than £650k although I'm unsure of the exact numbers and that £450k is my best estimate.