Inheritance tax nil rate band transfer of pre deceased

Terry1931

I must now face up to the probate if my father's estate. 

What would be the IHT threshold for my father's estate he passed away recently. 

My mother passed all nil rate bands to my father on her death in Feb 1991. 

My father has used no allowances and no gifting. 

The property is a qualified for the nil rate and I am the only sibling. 

My understanding is that my father's estate is now entitled to X2 threasholds of £325, 000 and X2  residential threasholds of £175,000 total of £1,000,000 before IHT is payable. 

naedanger

Terry1931 said:

I must now face up to the probate if my father's estate. 

What would be the IHT threshold for my father's estate he passed away recently. 

My mother passed all nil rate bands to my father on her death in Feb 1991. 

My father has used no allowances and no gifting. 

The property is a qualified for the nil rate and I am the only sibling. 

My understanding is that my father's estate is now entitled to X2 threasholds of £325, 000 and X2  residential threasholds of £175,000 total of £1,000,000 before IHT is payable. 

Your understanding is correct. (Obviously your late father's house needs to be worth more than £350,000 to claim both residential nil rate bands in full, or he needs to have downsided from such a house.) If the estate is worth more than £2million then entitlement to the residential nil rate bands starts to taper away.

Terry1931

Many thanks, I did ring HMRC to discus this and the advice given was that I should go back to 1991 and look at the nil rate band max applicable then and add that the the band applicable to my father on his death. But then strangely to add two residential property allowances of £175,000

I asked twice and the advisor confirmed but that's not logical. 

nom_de_plume

I suspect the confusion lies in that you use the nil rate band for the date of death to calculate what the carried forward allowance at today's rate would be. 
So for the tax year 1990/1 the nil rate band was £128,000 and if inheritance tax was paid on say £32,000 that would use up one quarter of the nil rate band leaving three quarters available on the second death. Bringing that up to date would mean three quarters of todays £325,000 rate would be available.

In your case your mother used none of the 1991 nil rate band so 100% of that is transferable at today's rate - £325,000.

naedanger

Terry1931 said:

Many thanks, I did ring HMRC to discus this and the advice given was that I should go back to 1991 and look at the nil rate band max applicable then and add that the the band applicable to my father on his death. But then strangely to add two residential property allowances of £175,000

I asked twice and the advisor confirmed but that's not logical. 

Your understanding is still correct. If you follow through the forms you will get the full £1 million.

The forms may well ask what was the nil rate band at your late mother's death. However as she did not leave anything to anyone other than your father the value you enter will not actually make any difference and the end result will be £325,000 (in respect of your late mother's basic NRB).

Terry1931

Many thanks for your advice.