IHT205 and 10% joint property discount

poppystar

getmore4less said:

Most of IHT400 can probably be ignored.

You can also use mums transferable RNRB and there will be mums regular nil rate band.

The house should be a qualifying asset including the life interest as that goes to a direct descendant(you) 

Might be a good idea to read up on the examples in the HMRC IHT manual all on line. 

Thanks,  have been looking at examples but can’t find any that mirror my situation, which I actually thought might be a common one. 

M died before RNRB came in so I believe that there is no transferable RNRB available.

Just about to look at the transferring of her unused regular nil rate band and seem to find myself hitting the same problem about the house - grrrh! Should the half of the house that was willed to me by her come off her £325k or not?! I thought it’s would but then if the whole house is being counted on F’s estate, as an IIP, aren’t we back into double counting territory? Surely it can’t count twice and come off both £325k allowances? 

xylophone

M died before RNRB came in so I believe that there is no transferable RNRB available.

See https://www.canadalife.co.uk/adviser/ican-academy/briefing-notes/estate-planning-trusts/the-residence-nil-rate-band

Transferring unused allowance

• Like the standard nil rate band, any unused RNRB can be transferred between spouses and civil partners to be used when the survivor of them dies, regardless of when the first death occurred and whether or not the first deceased held a qualifying residential interest (that is, property ownership is not required by the first deceased). The only check that is required is whether the first deceased’s estate was over £2 million. The transferable RNRB must be claimed by the personal representatives within two years from the end of the month in which the second death occurs.
• Where the first death occurs before 6 April 2017, 100% of the RNRB will be available to be transferred when the surviving spouse or civil partner subsequently dies, unless the estate was ‘large’ (see below). This is the case regardless of whether or not the first to die owned a qualifying residential interest.

getmore4less

(was on phone yesterday, not easy to search for the links a bit lat but here  are some).
https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/864520/Guide_to_completing_your_Inheritance_Tax_account__IHT400_notes__-_English.pdf
note 45   IHT418 

https://www.gov.uk/hmrc-internal-manuals/inheritance-tax-manual/ihtm16000
https://www.gov.uk/hmrc-internal-manuals/inheritance-tax-manual/ihtm16060


For the RNRB as said above the transferable is 100% because it could not have been used.
now you need to establish the qualifying interest then the qualifying persons.

The important bit is which bits of the house qualify the 1/2 owned is easy the, interest in possession is covered in the manual.
https://www.gov.uk/hmrc-internal-manuals/inheritance-tax-manual/ihtm46000
this cover the qualifying interest
https://www.gov.uk/hmrc-internal-manuals/inheritance-tax-manual/ihtm46011

close inheritance (qualifying person)
https://www.gov.uk/hmrc-internal-manuals/inheritance-tax-manual/ihtm46013

I think example 7 covers your situation for the interest in possession.
https://www.gov.uk/hmrc-internal-manuals/inheritance-tax-manual/ihtm46034

After the IHT(forms) notes I find the IHT manual very useful when trying to understand something, there is a lot to read and there are a lot of cross referencing for some section.

poppystar

getmore4less said:

(was on phone yesterday, not easy to search for the links a bit lat but here  are some).

After the IHT(forms) notes I find the IHT manual very useful when trying to understand something, there is a lot to read and there are a lot of cross referencing for some section.

Thanks, so good of you to get back to me.

I printed off the IHT400 notes, the form and all the schedules that seem to apply although think I missed the important IHT418. I prefer something printed that I can annotate as I go along. I shall attempt a run through this weekend to see if it’s feasible for me to go it alone. I’d originally thought this was going to be the easy bit having wrestled with the solicitor over their loss of the Will!!

I’m happy to learn what I need even if this is the only time I do this.

I’m confident there will be no inheritance tax due it’s just a matter of ensuring I can satisfactorily fill in the forms and provide the evidence for that. My confidence took a dent yesterday over the IIP mistake but onwards and upwards!

getmore4less

I like printed as well but have multiple screens on my computer which helps.

If the nil rate bands will cover everything just work through and do your best. 

If you have kids think about getting them involved. 

xylophone

https://www.gov.uk/guidance/trusts-and-inheritance-tax#dealing-with-a-trust-when-someone-dies

A home is included in a person’s estate if it is either held in:

• a bare trust
• an interest in possession trust so that they had the right to use or occupy the property

This can happen when a person is given a right to live in the family home following the death of their spouse. The home is held in trust for the lifetime of the beneficiary.

When the beneficiary dies, the estate will be eligible for the additional threshold as long as their direct descendants then inherit their home.

When your mother died, she left her  share of the property to you but with an interest in possession to her husband (your father), who was the other tenant-in-common of the property.

https://wards.uk.com/online-services/legal-guides/life-interests-rights-occupation/#

If the trust comes to an end on the death of the Life Tenant, again the capital value of the trust will be aggregated with the Life Tenant’s estate to calculate Inheritance Tax due. If the value of the trust and the estate together exceed the Nil Rate Band tax will be due at 40% on any excess and this will be apportioned between the trust and the estate.

The trustees and executors can make use of the usual exemptions (eg, where trust or estate assets pass to a surviving spouse or to charity), and the transferrable nil rate band rules (where the Life Tenant is a widow or widower), to reduce the tax payable.

poppystar

@getmore4less and @xylophone - thanks for your help. I’m now working my way through all the IHT400 forms and if (when!) I get a problem will start a new thread so that it might help anyone with the same issues. 

Before then can I just get one final piece of advice. I need to use the RNRB for current deceased and I will need a just a few more £000 in addition. I was intending therefore to use the transfer of RNRB for this. I could also claim the remainder of mother’s nil rate band. Do HMRC expect you to put in a claim for both or is it ok just to submit the 435 and 436 and ignore the 402? Ie. Do they want a full picture of all available allowances or simply enough to cover the estate value? 

Thanks