Inheritance tax

joebob

My mother is 85 and has asked me about inheritance tax her house is valued at 300K  and she has savings of 100K  .Am i correct in thinking there will be no inheritance tax to pay due to her qualifying for rnrb ?   Also she wants to gift me my sister and brother 6K now is this allowed as she has not gifted anything from last tax year ?  Or is the 3K gift not per person but per tax year?

[Deleted User]

Hi,

it's per tax year, though if not used last year can be carried forward.

Gov.UK IHT.

Jeremy535897

See https://www.gov.uk/guidance/check-if-you-can-get-an-additional-inheritance-tax-threshold

If her lifetime gifts exceed the exemptions available, the balance is treated as a potentially exempt transfer, so regarded as still in her estate if she dies within 7 years, so no worse than if she didn't make the gifts.

xylophone

Am i correct in thinking there will be no inheritance tax to pay due to her qualifying for rnrb ? 

 Is she a widow?  If so, does she also qualify for transferable nil rate bands in respect of your father? 

https://www.harrison-drury.com/home-family/inheritance-tax-transferable-nil-rate-bands-explained/

https://www.gov.uk/guidance/inheritance-tax-transfer-of-threshold

badger09

joebob said:

My mother is 85 and has asked me about inheritance tax her house is valued at 300K  and she has savings of 100K  .Am i correct in thinking there will be no inheritance tax to pay due to her qualifying for rnrb ?   Also she wants to gift me my sister and brother 6K now is this allowed as she has not gifted anything from last tax year ?  Or is the 3K gift not per person but per tax year?

Not sure whether the proposed gift is £6k in total, or £6k x 3 ie £18k. As others have said, the allowance is £3k per tax year, so she could give away £6k with no impact on IHT.

However, from the figures you've given, your mum's estate is not likely to be anywhere near £500k. In which case she can give each of you £6k if she wants to. She could also spend some of her savings making her own life more comfortable

Jeremy535897

There seems to be a misconception that lifetime gifts somehow increase inheritance tax, unless covered by exemptions. For example, the statement "your mum's estate is not likely to be anywhere near £500k, in which case she can give each of you £6k if she wants to". If her estate will not be chargeable to inheritance tax because it is and always will be too small, she can give away 0% or 100% or anywhere in between, and it won't matter for inheritance tax. It would be a bad idea to make large gifts for other reasons, but not inheritance tax.

joebob

xylophone said:

Am i correct in thinking there will be no inheritance tax to pay due to her qualifying for rnrb ? 

 Is she a widow?  If so, does she also qualify for transferable nil rate bands in respect of your father? 

https://www.harrison-drury.com/home-family/inheritance-tax-transferable-nil-rate-bands-explained/

https://www.gov.uk/guidance/inheritance-tax-transfer-of-threshold

she has been a widow for 15 years  as far as i know the value of the estate 15 years ago was approx 250K   

Keep_pedalling

As a widow she is way under IHT territory so will never have to worry about it. 

As has already been said she can gift as much as she likes but should maintain a good level of savings to make she she won’t go without in her latter years.

Any gifts over the exempt allowance should be documented to make life for her executor easier.

qprjames

This is my first post, so my apologies if I have posted in in the wrong section.
I want to check on an Inheritance tax situation my family has. I'm ignoring the 7 year rule for the moment and just focusing on this moment in time right now.

My father passed away a few years ago, and left all his money AND the family house to my mum.
So now my mum has the house (which is valued at 1,000,000 - no mortgage) and she has a total of 300,000 in money (shares).
so I assume therefore that (assuming the full 500,000 allowance was passed onto my mum during probate) my mums allowance would then be 1 million? therefore 40% inheritance tax payable on the remaining 300,000 share money?
Is this correct?

Further question - she has no wish to keep hold of this remaining 300,000 and would rather the kids don't get hit with the eventual 40% tax - so she wants to give it away now rather than later. She is happy to give this amount now to the kids (3 of us).
Is there any reason for her NOT to do this? We would make it a verbal condition amongst the family members that this money would be on hand, in the unlikely event she ever needs it back straight away - i.e. for medical treatment etc. so for example, it would not be able to be invested into a property etc - only shares or in cash. Essentially we are just trying to safeguard the money from the 40% tax levy.

whizzywoo

qprjames said:

This is my first post, so my apologies if I have posted in in the wrong section.
I want to check on an Inheritance tax situation my family has. I'm ignoring the 7 year rule for the moment and just focusing on this moment in time right now.

My father passed away a few years ago, and left all his money AND the family house to my mum.
So now my mum has the house (which is valued at 1,000,000 - no mortgage) and she has a total of 300,000 in money (shares).
so I assume therefore that (assuming the full 500,000 allowance was passed onto my mum during probate) my mums allowance would then be 1 million? therefore 40% inheritance tax payable on the remaining 300,000 share money?
Is this correct?

Further question - she has no wish to keep hold of this remaining 300,000 and would rather the kids don't get hit with the eventual 40% tax - so she wants to give it away now rather than later. She is happy to give this amount now to the kids (3 of us).
Is there any reason for her NOT to do this? We would make it a verbal condition amongst the family members that this money would be on hand, in the unlikely event she ever needs it back straight away - i.e. for medical treatment etc. so for example, it would not be able to be invested into a property etc - only shares or in cash. Essentially we are just trying to safeguard the money from the 40% tax levy.

You have posted at the end of someone else's thread.  This causes confusion because people read the first question and answer that one instead of yours.  Please post your question again here on the Cutting Tax part of the forum:  https://forums.moneysavingexpert.com/post/discussion/cutting-tax

Saucey

My aunt is 84, she was widowed in 1985, she inherited by survivorship from her husband. My father (her brother in law) was  widowed in 1988 and the two of them began living together in her home in 1990. My father sold his home. She made my father joint owner of her home in the 1990's. My father died in 2008 and his share of the home went to her in his will. They never married. My aunt never had children. Is there any way of avoiding inheritance tax once she dies, she wants to share the estate between her 2 nieces ( and their children ) and the 2 children of a family friend. Her estate including the property is likely to be approximately £1 million with the property taking the largest proportion?