Inheritance tax in instalments.

Wickers_2

Hello,

I am dealing with my deceased uncles estate which amounts to approximately £405,000. This is made up of a £385,000 house and £20,000 savings in a building society. For simplicity I have left out details of personal belongings and furniture etc.

There is therefore a 40% tax bill to pay on £80,000. I would like to pay this over 10 years in instalments but looking into the detail you can only pay instalments on property and not on savings.

Does this mean that by paying in instalments that my first inheritance bill will be made up of 40% of the £20,000 savings plus 10% of the property value over the £325,000 threshold?

Thanks in advance for any help that you may give.

Keep_pedalling

As more than 20% of the estate is the home I believe you can pay the entire amount in instalments.

I presume you want to this is because the beneficiaries wish to keep the house, because if you sell it at any point during those 10 years the entire outstanding amount has to be paid.

Wickers_2

Thanks for the advice.

We do not wish to keep the house but to sell ASAP. The issue is that we do not wish to find a large tax bill ourselves but would rather pay most of the tax bill after we get the proceeds from the house.
As you mention about paying the entire tax bill if the house is sold within 10 years will that amount to whole tax bill plus ALL the interest that is calculated for the 10 year period???

Thanks

Keep_pedalling

Wickers wrote: »

Thanks for the advice.

We do not wish to keep the house but to sell ASAP. The issue is that we do not wish to find a large tax bill ourselves but would rather pay most of the tax bill after we get the proceeds from the house.
As you mention about paying the entire tax bill if the house is sold within 10 years will that amount to whole tax bill plus ALL the interest that is calculated for the 10 year period???

Thanks

No, once the house is sold you request a final balance, which will include interest for the period from the last installment paid.

getmore4less

https://www.gov.uk/paying-inheritance-tax/yearly-instalments

Wickers_2

Thanks again for the advice.

Regarding personal belongings are you OK to sell these before probate (Letters of Administration) has been issued and then send the sales receipt along with the IHT400 form?

Yorkshireman99

Yes. The value of many personal belongings can be negligible so sensible estimates can be used. note that the value is thatvat the date of death. You can't deduct the selling expenses for the house either. Regarding the payment by instalments you should check what it will cost to borrow the money compared with what HMR&C will charge. This might be cheaper.

Keep_pedalling

Yorkshireman99 wrote: »

Yes. The value of many personal belongings can be negligible so sensible estimates can be used. note that the value is thatvat the date of death. You can't deduct the selling expenses for the house either. Regarding the payment by instalments you should check what it will cost to borrow the money compared with what HMR&C will charge. This might be cheaper.

HMRCs current interest rate is 2.75%