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Tax and inhertitance tax query

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  • Tom99 wrote: »
    [FONT=Verdana, sans-serif]If your dad passed away within 7 years of the gift to you, but left everything to your mum, there would be no IHT to pay on his death but he would have used up some of his nil rate band so the amount of NRB your mother would inherit would be reduced by the amount of gift to you.

    [/FONT] [FONT=Verdana, sans-serif]Hence my £325k + £261k = £586k being the NRB your mum would have to set against her estate.

    [/FONT] [FONT=Verdana, sans-serif]If your dad died 1st but you could show that the gift to you came entirely from you mum (not sure how you would prove that) then all of you dad's NRB would transfer to your mum so she would have £650k NRB.[/FONT]


    Understood!


    I have read how a taper relief can reduce tax due on PETs. Does this apply to my situation explained above
  • Tom99
    Tom99 Posts: 5,371 Forumite
    1,000 Posts Second Anniversary
    Understood!


    I have read how a taper relief can reduce tax due on PETs. Does this apply to my situation explained above

    No taper relief only applies to the amount of gift over £325k between 3-7 year. So your gift will be knocked of the NRB even if it was after 6 yr 364 days.
  • Tom99 wrote: »
    [FONT=Verdana, sans-serif]Re the £140k gift if this was £70k from each parent and they each had available that years and the previous years £3k exemption then a PET of £64k for each parent would be deducted from their nil rate band if one were to die within 7 years of the gift[/FONT][FONT=Verdana, sans-serif].[/FONT]


    "that years and the previous years £3k exemption" Is this something that's worked out while filing for IHT or does this 3k have to be transferred every year for this to be achieved?
  • Tom99
    Tom99 Posts: 5,371 Forumite
    1,000 Posts Second Anniversary
    "that years and the previous years £3k exemption" Is this something that's worked out while filing for IHT or does this 3k have to be transferred every year for this to be achieved?

    [FONT=Verdana, sans-serif]As far as the past PET gift is concerned that is now done and dusted but its worth making a note now about the £3,000 exemptions.

    [/FONT] [FONT=Verdana, sans-serif]So say this gift was made in May 2015, then the 2015-16 £3k allowance would be available but if that parent had not made and gifts in 2014-15 then that previous year allowance can be used against the May 2015 gift as well, hence the £6k allowance off £70k gift.

    [/FONT] [FONT=Verdana, sans-serif]Each year since also has a £3k allowance so right now March 2018 you could make a £3k gift from this years allowance and also carry forward £3k from 2016-17 if not already used.

    [/FONT] [FONT=Verdana, sans-serif]You could also make yet another gift of £3k using 2018-19 allowance on April 6th.

    [/FONT] [FONT=Verdana, sans-serif]The £3k is not the only gift allowance there are others as well see here:

    [/FONT] [FONT=Verdana, sans-serif]https://www.gov.uk/inheritance-tax/gifts[/FONT]
  • jude_s
    jude_s Posts: 62 Forumite
    Part of the Furniture Combo Breaker
    I’m a bit confused about the wording on the HMRC website regarding inheritance tax thresholds.
    If parent 1 died prior to April 17 and was below 325k and willed everything including house to spouse what would be the threshold for Inheritance tax if the spouse died this year and willed everything inc house to children please?
    Many thanks.
    :T
  • Tom99
    Tom99 Posts: 5,371 Forumite
    1,000 Posts Second Anniversary
    jude_s wrote: »
    I’m a bit confused about the wording on the HMRC website regarding inheritance tax thresholds.
    If parent 1 died prior to April 17 and was below 325k and willed everything including house to spouse what would be the threshold for Inheritance tax if the spouse died this year and willed everything inc house to children please?
    Many thanks.

    [FONT=Verdana, sans-serif]£850k if they died before 6th April and £900k if they died after, providing the house was worth at least £200k before 6th and £250k after 6th.[/FONT]
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