Understanding IHT

susansday

My husband's estate, including the house, will come to over the IHT allowance. The whole pot is split between me and his daughter a 46/54% split.
a) Does that mean that my 46% share is exempt from IHT and
b) does the fact that his daughter is liable to inherit a share of the house mean we qualify for the higher allowance?
If a) applies we are well within the £325,000 limit.
NB She is not interested in living there and I have kept my own home as originally it was intended that she would inherit the house outright.

Malthusian

a) Yes
b) No IHT is payable if your daughter's share is within the £325,000 nil rate band. Residential nil rate band could only be claimed by the daughter if he died after 6 April 2017, however if her share is covered by the normal NRB it doesn't matter.

Regardless of when he died, the unused Nil Rate Band and Residential Nil Rate Band will pass to you, and can be used when you eventually pass on.

Keep_pedalling

If the 54% going his daughter is over £325,000 then there will be IHT to pay and the transferable allowance will be wiped out. If it is under that amount then there will be none to pay, and the transferable allowance will be reduced based on the percentage of £325,000 that his daughter will receive.

When you say higher allowance do you mean the primary residential nil rate band? If so what was the date of death?

susansday

The sum going to his daughter is comfortably under the £325,000. He has not died but it is imminent and he is desperately trying to get everything in order according to the latest legislation.
I am very grateful for the help as it sets his mind at rest at this difficult time.

Keep_pedalling

susansday wrote: »

The sum going to his daughter is comfortably under the £325,000. He has not died but it is imminent and he is desperately trying to get everything in order according to the latest legislation.
I am very grateful for the help as it sets his mind at rest at this difficult time.

In that case you can reassure him that there is no IHT to be paid and that he has no reason waste any of his precious time on this.

His main residence nil rate band will not be used, but can be used for your estate providing that you have children of your own.