Inheritance tax

logs08

Any advice would be greatly appreciated. I recently received inheritance money from my late mother, I haven’t had to pay inheritance tax as it is below the threshold. However if I use the money to purchase a business do I have to pay tax on the inheritance money I use? 

naedanger

logs08 said:

Any advice would be greatly appreciated. I recently received inheritance money from my late mother, I haven’t had to pay inheritance tax as it is below the threshold. However if I use the money to purchase a business do I have to pay tax on the inheritance money I use? 

No, you can use the money for whatever you want without having to pay any extra taxes beyond what you normally would. (So obviously if the business makes profits you have to pay the usual taxes on those in the same way anyone else would.) 

tacpot12

If you are going to buy a business, you might want to find a good local accountant first. They will help you value the business so that you don't overpay for it. It would better to keep as much as your inheritance as you can to build the business up, rather than pay it away to the person selling the business.  

StevieD54

This example is quoted from this very site, MSE.......
——-
Mr and Mrs Youngatheart have assets worth £1 million between them. Mr Y dies first in 2021/22 – leaving everything to Mrs Y – so his £325,000 tax-free allowance is passed on, as well as his £175,000 main residence allowance. In total, this means Mrs Y may have up to a £1 million tax-free allowance: her allowance, plus her inherited allowance from her deceased husband.
——-
Now, this looks as if Mrs Y also gets a £500k Allowance, but is that actually the case?
Mr Y has passed on his £175k to her, but how can she do the same, as there’s no spouse to pass it on to?  Surely she doesn’t get a £500k allowance also?  (i.e. £1m in total when she dies)

I'm interested in this because of the wording in this example.  It suggests that these allowances are only valid if Mr Y leaves everything to his wife.  However, my Dad has left his share of their bungalow to my Mum, then one or two small specified sums to friends, and then split the remainder of his estate 50:50 between my sister and I.  My question is: how does this affect his allowances with regard to IHT?  e.g. are things different because he hasn’t left everything to Mum?

p00hsticks

StevieD54 said:

This example is quoted from this very site, MSE.......
——-
Mr and Mrs Youngatheart have assets worth £1 million between them. Mr Y dies first in 2021/22 – leaving everything to Mrs Y – so his £325,000 tax-free allowance is passed on, as well as his £175,000 main residence allowance. In total, this means Mrs Y may have up to a £1 million tax-free allowance: her allowance, plus her inherited allowance from her deceased husband.
——-
Now, this looks as if Mrs Y also gets a £500k Allowance, but is that actually the case?
Mr Y has passed on his £175k to her, but how can she do the same, as there’s no spouse to pass it on to?  Surely she doesn’t get a £500k allowance also?  (i.e. £1m in total when she dies)

I'm interested in this because of the wording in this example.  It suggests that these allowances are only valid if Mr Y leaves everything to his wife.  However, my Dad has left his share of their bungalow to my Mum, then one or two small specified sums to friends, and then split the remainder of his estate 50:50 between my sister and I.  My question is: how does this affect his allowances with regard to IHT?  e.g. are things different because he hasn’t left everything to Mum?

You'll probably get better responses if you start your own thread rather than posting on the end of a year old one that appears to have no relevance to the query you have ?

But basically, yes, things are different if not everything is left to the spouse - only the unused part of the IHT allwance can be transferred - see here

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