Probate form IHT403 - Gifts

pip895

We made the decision to apply for probate ourselves and so far it seems pretty straightforward. That is until I hit IHT403. My Dad was very organised everything well documented and correctly filed.

As the house puts us pretty close to the IHT threshold Dad always made sure he used up his gift allowance using both the £3000 pound allowance and topping up with gifts out of excess income. For 5 of the seven years, if I can find the data I think we are well within the allowance. The sixth year he had a fall near the end of the year and needed more home help + put in a lift which added a good deal of cost. Am I right that the cost of the lift could be excluded as a capital expense??

In the last year he had no excess income as by then he had a live in carer. He asked that we give this carer and a few others gifts at the end which we did. This put us over the 3k limit but that's not an issue we will simply declare these and they will be accounted for.

My questions are 1. Am I right that the house adaptions that were put in, most notably the lift don't need to be included in expenditure?
2. Just how much detail is going to be required for all the earlier years where we are pretty sure there is no liability anyway. It is going to be a mammoth task working some of this out - we haven't as yet even found a register of gifts...

Keep_pedalling

Be careful with those gifts out of excess income, they are only really appropriate where income exceeds expenses above the £3000 annual allowances, which should be included in expenses, as should the house adaptions.

Have you taken into account his residence nil rate band and any transferable allowances if he was a widower?

SeniorSam

I trust that you have not forgotten about the residential allowance that is available for home owners in addition to the nil rate band allowance for IHT. a married couple would therefore have the £325,000 each and ££150,000 each, so £950,000 before tax. (Under the rules, if you're passing your home to a direct descendant, you can benefit from an additional £150,000 in tax-free allowance in the 2019-20 tax year )

Tom99

1 - I would regard the lift as capital since it is a permanent feature but the carer costs are expenditure.
2 - You will have seen questions 20 & 21 on IHT403 regarding what level of detail you need to provide. That level of detail is pretty hard to reconstruct unless your father kept very detailed records for the past 7yrs.

Linton

Have you made full use of carry forward for both the £3000 (1 year) and gifts from income allowance (2 years)?

pip895

Tom99 wrote: »

1 - I would regard the lift as capital since it is a permanent feature but the carer costs are expenditure.

Thanks that's what I assumed but wasn't sure.

Tom99 wrote: »

2 - You will have seen questions 20 & 21 on IHT403 regarding what level of detail you need to provide. That level of detail is pretty hard to reconstruct unless your father kept very detailed records for the past 7yrs.

It is going to be a pain but I have all his bank statements and tax returns I suppose...

Actually the allowances will probably cover us anyway (full 950k) - I do wonder if its worth the trouble. My issue is the range of valuations we have had on the house is well over 100k!

We will probably put in a deed of variation to keep us under the threshold if the house surprises on the up side anyway, so perhaps I wont bother with the excess income bit...

pip895

Linton wrote: »

Have you made full use of carry forward for both the £3000 (1 year) and gifts from income allowance (2 years)?

I wasn't aware of the two years draw forward - probably means if I could get the data together everything would be exempt, except the final year.

Keep_pedalling

pip895 wrote: »

Thanks that's what I assumed but wasn't sure.



It is going to be a pain but I have all his bank statements and tax returns I suppose...

Actually the allowances will probably cover us anyway (full 950k) - I do wonder if its worth the trouble. My issue is the range of valuations we have had on the house is well over 100k!

We will probably put in a deed of variation to keep us under the threshold if the house surprises on the up side anyway, so perhaps I wont bother with the excess income bit...

You really should get a paid for RICS valuation, not rely on estate agent valuations.

A deed of variation will only work if you plan to divert part of the estate to a charity.

pip895

Keep_pedalling wrote: »

You really should get a paid for RICS valuation, not rely on estate agent valuations.

Are they any better though? - I have herd mixed reports.

Keep_pedalling wrote: »

A deed of variation will only work if you plan to divert part of the estate to a charity.

That was our intention.