Cyprus 2629

Cyprus2629

A bit confused in Martin's article about Inheritance Tax he says in one section a couple are allowed asserts property savings car ECT of 900.000 before then pay tax further down Martin says so working it out if a couple has assets totalling 650.000 they should not have any tax to pay.

Confused on this one Martin.

Can someone clarify it for me please.

HappyHarry

Cyprus2629 wrote: »

A bit confused in Martin's article about Inheritance Tax he says in one section a couple are allowed asserts property savings car ECT of 900.000 before then pay tax further down Martin says so working it out if a couple has assets totalling 650.000 they should not have any tax to pay.

Confused on this one Martin.

Can someone clarify it for me please.

Each has a Nil Rate Band of £325,000.

There is no IHT between married couples and those in a civil partnership. This means that if on first death, the remaining partner inherits everything, then the remaining partner's executors can apply to use both Nil Rate Bands, and have £650,000 of the estate charged IHT at 0%.

If someone leaves their main residence (or the value of it) to children or grandchildren, and the total estate is less than £2m, then the executors can claim up to an additional £125,000 (rising to £175,000 by 06Apr2020) for each parent.

Example:
Mr X dies in 2016 and left his entire estate to his wife, Mrs X.
Mrs X died in August 2018, and left her entire estate, including the £400,000 property they previously both owned to their two children. Mrs X's total estate was £1.9m

Mrs X's executors can use two Nil Rate Bands of £325,000 and two residence Nil Rate Bands of £125,000 to come to a total of £900,000 that will be taxed at 0%.

The remaining £1m of the estate will be taxed at 40%, generating a tax bill of £400,000.