Spouse and IHT

Dinsdale1947

I am likely to face a situation where my wife's estate incurs significant IHT and is divided between me and others in her family. Oversimplifying, let's say 500,000, nett £430,000. The will divides the estate 50% to me and 25% to 2 others. My share of the estate is free of IHT. I want to understand whether my 50% is before IHT, £250,000 or not (£215,000). Do the others, in this case, bear all the IHT? I have googled for hours; but can find no definitive guidance on this, only implied answers. Can anyone point me to a site that lays this out explicitly, please?

getmore4less

Look up nil rate band, you don't seem to have used that

On those numbers there is no IHT to pay.

One way to get an idea on how it works it to complete the IHT forms as they guide you through the steps.

Yorkshireman99

Dinsdale1947 wrote: »

I am likely to face a situation where my wife's estate incurs significant IHT and is divided between me and others in her family. Oversimplifying, let's say 500,000, nett £430,000. The will divides the estate 50% to me and 25% to 2 others. My share of the estate is free of IHT. I want to understand whether my 50% is before IHT, £250,000 or not (£215,000). Do the others, in this case, bear all the IHT? I have googled for hours; but can find no definitive guidance on this, only implied answers. Can anyone point me to a site that lays this out explicitly, please?

Sounds like your wife need paid for professional advice on IHT planning specialist. This could save you all far nmore than the advice will cost. You will not find a reliable answer by any other method.

nom_de_plume

Dinsdale1947 wrote: »

I am likely to face a situation where my wife's estate incurs significant IHT and is divided between me and others in her family. Oversimplifying, let's say 500,000, nett £430,000. The will divides the estate 50% to me and 25% to 2 others. My share of the estate is free of IHT. I want to understand whether my 50% is before IHT, £250,000 or not (£215,000). Do the others, in this case, bear all the IHT? I have googled for hours; but can find no definitive guidance on this, only implied answers. Can anyone point me to a site that lays this out explicitly, please?

You calculations are incorrect.

Your 50% would be free of IHT as it is to her husband. The remainder would be subject to IHT calculation but would be under the IHT threshold so no IHT would be due.

nom_de_plume

Also OP, are any of what you class as your wife's estate actually jointly owned with you? Bank accounts, property, or the like?

Tom99

[FONT=Verdana, sans-serif]There is no IHT if your wife dies before you but you will only inherit £75k of her basic Nil Rate Band because she will have used £250k of it on the other family. [/FONT]

Dinsdale1947

Thank you everyone. I was wrong with my numbers (got sloppy trying to 'simplify') and should have been clearer.
My wife is in palliative (dementia) care, so I am trying to understand the likely situation of her dying before me. The will will be as it is, no further IHT planning possible.
I am confident of calculating the IHT (!) and HMRC give good help on that.
Forgetting the actual numbers, my question is, given there is IHT to pay, is my % share based on the estate before IHT or after? Where can I find an authoritative statement on this?
Better numbers:
Estate = £600,000
20% to me, spouse; 80% to children.
Nil rate: 375,000 + 600,000*20% = 375,000 + 120,000 = 495,000
Taxable amount = 600000 - 495,000 = 105,000
Tax at 40% on 105,000 = 42,000
Net estate = 600,000 - 42,000 = 558,000

Do I get 20% of 600,000 or 20% of 558,000?

Thanks for your patience.

getmore4less

If there is a house and any life interest to you then you need to adjust your numbers.

also nil rate band is £325k not £375k

does the will not mention any free of tax legacies as that may require grossing up.

nom_de_plume

Dinsdale1947 wrote: »

Thank you everyone. I was wrong with my numbers (got sloppy trying to 'simplify') and should have been clearer.
My wife is in palliative (dementia) care, so I am trying to understand the likely situation of her dying before me. The will will be as it is, no further IHT planning possible.
I am confident of calculating the IHT (!) and HMRC give good help on that.
Forgetting the actual numbers, my question is, given there is IHT to pay, is my % share based on the estate before IHT or after? Where can I find an authoritative statement on this?
Better numbers:
Estate = £600,000
20% to me, spouse; 80% to children.
Nil rate: 375,000 + 600,000*20% = 375,000 + 120,000 = 495,000
Taxable amount = 600000 - 495,000 = 105,000
Tax at 40% on 105,000 = 42,000
Net estate = 600,000 - 42,000 = 558,000

Do I get 20% of 600,000 or 20% of 558,000?

Thanks for your patience.

On these numbers and with the correct nil rate band of £325k,you would receive the full 20% (120k) and the tax would be calculated on the remainder less nil rate (£480k - £325K) so £155k x 40% = £62k so £480k - £62k = £418k to children.

Are your wife's assets hers and hers only? Without going into intricate detail what do they comprise of? EG a house she and she alone owns, a life insurance policy, shares, premium bonds. Are any in joint names with you?

Dinsdale1947

It's the principle I'm after, so your answer is enough to confirm my expectation; but do you know where I can find definitive information from an official source (no disrespect intended)?

Yorkshireman99

Dinsdale1947 wrote: »

It's the principle I'm after, so your answer is enough to confirm my expectation; but do you know where I can find definitive information from an official source (no disrespect intended)?

You will have to pay an IHT specialist,