Nil rate band transferred to spouse

Nikkimikki

Hi
i was hoping to get some clarity on the following scenario:

- Mr A and Mrs B are married
- Mrs B dies leaving a Will which leaves her estate to Mr A entirely (£700k) including her share of the marital home.  This home will ultimately be left to their children on the death of Mr A.
- Mrs B made gifts of £10k four years before she died

Questions:
- is IHT payable if the gift and if so, is taper relief available?

- is the Nil rate band affected by this gift ie is the nil rate band then available to Mr A reduced by the amount of the gift?

many thanks!

naedanger

Nikkimikki said:

Hi
i was hoping to get some clarity on the following scenario:

- Mr A and Mrs B are married
- Mrs B dies leaving a Will which leaves her estate to Mr A entirely (£700k) including her share of the marital home.  This home will ultimately be left to their children on the death of Mr A.
- Mrs B made gifts of £10k four years before she died

Questions:
- is IHT payable if the gift and if so, is taper relief available?

- is the Nil rate band affected by this gift ie is the nil rate band then available to Mr A reduced by the amount of the gift?

many thanks!

No IHT is due on the gift. If the £10k was all made in one tax year then after deducting annual allowances its value is £4k. So the nil rate band would be reduced by £4k to £321K. (If the £10k was spread over more than one tax year the value of the gift after allowances would be less and possibly £0).

On eventual death of Mr A (on current tax rules and using current allowances) the IHT threshold would be £1m less £4k (referred to in previous paragraph) if the house is worth over £350k.

Keep_pedalling

Taper relief is only applicable on gifts in excess of the NRB (£325k).

As has already been said £6000 of that gift is exempt, unless if was a wedding gift to a child in which case all of it will be exempt as a parent can make an exempt gift of £10k to a child in contemplation of marriage.

getmore4less

If there is just 1 £10k gift it can be covered by 2 years worth of exemptions.

Nikkimikki

naedanger said:

Nikkimikki said:

Hi
i was hoping to get some clarity on the following scenario:

- Mr A and Mrs B are married
- Mrs B dies leaving a Will which leaves her estate to Mr A entirely (£700k) including her share of the marital home.  This home will ultimately be left to their children on the death of Mr A.
- Mrs B made gifts of £10k four years before she died

Questions:
- is IHT payable if the gift and if so, is taper relief available?

- is the Nil rate band affected by this gift ie is the nil rate band then available to Mr A reduced by the amount of the gift?

many thanks!

No IHT is due on the gift. If the £10k was all made in one tax year then after deducting annual allowances its value is £4k. So the nil rate band would be reduced by £4k to £321K. (If the £10k was spread over more than one tax year the value of the gift after allowances would be less and possibly £0).

On eventual death of Mr A (on current tax rules and using current allowances) the IHT threshold would be £1m less £4k (referred to in previous paragraph) if the house is worth over £350k.

Thanks for your reply.  I though the annual exemption was £3k.  Is it £6k?

getmore4less

Nikkimikki said:

naedanger said:

Nikkimikki said:

Hi
i was hoping to get some clarity on the following scenario:

- Mr A and Mrs B are married
- Mrs B dies leaving a Will which leaves her estate to Mr A entirely (£700k) including her share of the marital home.  This home will ultimately be left to their children on the death of Mr A.
- Mrs B made gifts of £10k four years before she died

Questions:
- is IHT payable if the gift and if so, is taper relief available?

- is the Nil rate band affected by this gift ie is the nil rate band then available to Mr A reduced by the amount of the gift?

many thanks!

No IHT is due on the gift. If the £10k was all made in one tax year then after deducting annual allowances its value is £4k. So the nil rate band would be reduced by £4k to £321K. (If the £10k was spread over more than one tax year the value of the gift after allowances would be less and possibly £0).

On eventual death of Mr A (on current tax rules and using current allowances) the IHT threshold would be £1m less £4k (referred to in previous paragraph) if the house is worth over £350k.

Thanks for your reply.  I though the annual exemption was £3k.  Is it £6k?

You can carry a year to make it £6k.
(Cancel my previous suggestion)

Were there no shared finances to split the gift?

Nikkimikki

getmore4less said:

Nikkimikki said:

naedanger said:

Nikkimikki said:

Hi
i was hoping to get some clarity on the following scenario:

- Mr A and Mrs B are married
- Mrs B dies leaving a Will which leaves her estate to Mr A entirely (£700k) including her share of the marital home.  This home will ultimately be left to their children on the death of Mr A.
- Mrs B made gifts of £10k four years before she died

Questions:
- is IHT payable if the gift and if so, is taper relief available?

- is the Nil rate band affected by this gift ie is the nil rate band then available to Mr A reduced by the amount of the gift?

many thanks!

No IHT is due on the gift. If the £10k was all made in one tax year then after deducting annual allowances its value is £4k. So the nil rate band would be reduced by £4k to £321K. (If the £10k was spread over more than one tax year the value of the gift after allowances would be less and possibly £0).

On eventual death of Mr A (on current tax rules and using current allowances) the IHT threshold would be £1m less £4k (referred to in previous paragraph) if the house is worth over £350k.

Thanks for your reply.  I though the annual exemption was £3k.  Is it £6k?

You can carry a year to make it £6k.
(Cancel my previous suggestion)

Were there no shared finances to split the gift?

Oh I see what you mean.  The annual exemption for the current and previous year had already been used.