Inheritance Tax

pinchmyself

My mother recently passed leaving an amount of cash in the bank of around £160,000 and a property which should realise around £200-225,000. She left a will with some small amounts to grandchildren of around £40,000 and the rest to me. I'm not quite sure about the inheritance tax liabilty. As far as I can see, despite the total value of the estate being around £385,000, because the property comes to me, does the threshold start at £425,000 as it includes the property and if I read HMRC guidleines correctly, there is an additional £100,000 allowed because a property is involved?

bigadaj

Yes looks as though there is no iht liability.

There may well of course have been an allow ace inherited from your father which would have meant no liability even without the property allowance that came in this year.

Money_Help

Based on what you have described, there does not appear to be an immediate Inheritance Tax problem. The new Residential Nil Rate Band of £100,000 applies to the property only and you can only claim this on the part of the property left to linear descendants (children, grandchildren etc).

You can use the normal Nil Rate Band of £325,000 for the rest of the estate and possibly more if your mother was married previously and her partner did not use their own allowances on death.

One thing to think about may be your own position. How does this inheritance impact on your own estate, does it now give you and your children an Inheritance Tax problem in the future? If so you may want to consider whether receiving the Inheritance directly is the best thing.

If you feel the Inheritance is best being re-directed you can use what's called a Deed of Variation within 2 years of death to make changes.

pinchmyself

Many thanks, and despite feeling somewhat happier that we do not have any tax to pay on this inheritance, you are right, this does create a longer term issue at it pushes the value of our estate up to a quite considerable sum.
We are 64 and just coming up to retirement, so do need to make some long term plans

mgdavid

pinchmyself wrote: »

Many thanks, and despite feeling somewhat happier that we do not have any tax to pay on this inheritance, you are right, this does create a longer term issue at it pushes the value of our estate up to a quite considerable sum.
We are 64 and just coming up to retirement, so do need to make some long term plans

Enjoy your retirement, spend (some of) it on yourselves - you deserve it.