Inheritance tax as non-linear relative

Kate23rd

Hi all,

Can anyone clear this up for me please? My siblings and I are due to receive a sizeable inheritance soon from our aunt. It will be subject to IHT, but the solicitors are saying that we are entitled to her deceased husband’s entitlement as well- so 650 tax free, not just her 325. Two separate solicitors have told us this, but everything I have read online says that the husband’s entitlement can only be shared with linear relations- children and grandchildren, but not siblings or nieces and nephews.

Can anyone clear this up and, if the solicitors are right, explain how we are entitled to my uncle’s allowance as well?

Either way, we find ourselves in a very fortunate position, but are puzzled!

Thanks

Keep_pedalling

As your uncle left everything to his wife his whole estate was exempt from IHT so his whole allowance transferable to her estate.

Where you are probably getting confused is with the newer primary residence nil rate band, which is also transferable, but can only be used to benefit direct decendance,

Kate23rd

So the first 650 of her estate would be exempt?

Thanks for your reply- to a question I almost certainly placed in the wrong place!

00ec25

Kate23rd wrote: »

So the first 650 of her estate would be exempt?!

yes, the husband's allowance transferred to his wife. Whoever (or whatever) subsequently inherits from the wife in that context is irrelevant

Kate23rd wrote: »

Thanks for your reply- to a question I almost certainly placed in the wrong place!

tax question, tax board, looks good to me

polymaff

I think that you may be muddling the role of IHT.

Only the deceased's estate has anything to do with IHT. IHT is taken off the deceased's estate before the beneficiaries benefit. In this case, the deceased's estate has the deceased's and the pre-deceased spouse's allowance available and will pay IHT on the deceased's estate less those allowances. Then the beneficiaries - who ever they are - benefit from the nett estate.

So separate "we" - the beneficiaries - from the taxation of the estate and accept that the only inheritance of allowances will be the estate's linear inheritance of the pre-deceased spouse's allowance.

Kate23rd

Thank you all. Really do appreciate your help!