inheritance tax

efes_shareholder

hi
i'm slightly confused re inheritance tax.
my mother recently passed away and I am in the process of preparing to apply for probate.
my mother leaves a house valued around 400k with debts attached at around 60k leaving the estate value @ 340k
which i understand is 15k over the 325k threshold.

I've read that should the estate be left to direct relatives there is a further threshold of 175k to be applied as long as the property is less then 2 million in value?

Is this correct , my mum was widowed and the house has been in her sole name since the divorce to my dad in 1988. she has left the house in equal share to my sister and I.

would we be liable for inheritance tax? 

SeniorSam

Sorry for your loss.  Your mother has her allowances of £325,000 and Residential Allowance of £175,000. The executors can also apply for the £325,000 of your father and his residential allowance of £175,000 but is not needed. There should not be any tax to pay. 

Probate will require forms IHT400 and application with the original Will and death certificate..

Keep_pedalling

A widow can leave up to £1M tax tree if they were left the entire estate of their spouse.

I am a bit confused in that you say she is a widow widow and divorced from your father. 

efes_shareholder

Keep_pedalling said:

A widow can leave up to £1M tax tree if they were left the entire estate of their spouse.

I am a bit confused in that you say she is a widow widow and divorced from your father. 

My mum purchased the house with my dad in the 70’s ( her husband ) 
they divorced in 88 and my mum retained the property 
she remarried in 93 and my step father passed in 2017 

My step father was never on the deeds to the house 

efes_shareholder

SeniorSam said:

Sorry for your loss.  Your mother has her allowances of £325,000 and Residential Allowance of £175,000. The executors can also apply for the £325,000 of your father and his residential allowance of £175,000 but is not needed. There should not be any tax to pay. 

Probate will require forms IHT400 and application with the original Will and death certificate..

Thank you , so basically as long as the estate is under 500k there will be no inheritance tax to pay ? 

Keep_pedalling

efes_shareholder said:

Keep_pedalling said:

A widow can leave up to £1M tax tree if they were left the entire estate of their spouse.

I am a bit confused in that you say she is a widow widow and divorced from your father. 

My mum purchased the house with my dad in the 70’s ( her husband ) 
they divorced in 88 and my mum retained the property 
she remarried in 93 and my step father passed in 2017 

My step father was never on the deeds to the house 

Thanks for clarifying that. If your stepfather did not use up all his NRB on bequests to people other than your mother, any unused NRB can be transferred to her estate. Interestingly even though her was never an owner his RNRB could also be transferred to your mother’s estate if you needed it.

jcuurthht

SeniorSam said:

Sorry for your loss.  Your mother has her allowances of £325,000 and Residential Allowance of £175,000. The executors can also apply for the £325,000 of your father and his residential allowance of £175,000 but is not needed. There should not be any tax to pay. 

Probate will require forms IHT400 and application with the original Will and death certificate..

I was of the understanding that if the estate passes to the child and the parent died after 1 Jan 2022, there is no need to complete the inheritance tax forms.

https://www.gov.uk/valuing-estate-of-someone-who-died/excepted-estates-1-january-2022

SeniorSam

ALL estate need to calculate if there is inheritance tax payable. If under £500,000 no IHT .

Please let us know if this was the case here ?

jcuurthht

SeniorSam said:

ALL estate need to calculate if there is inheritance tax payable. If under £500,000 no IHT .

Please let us know if this was the case here ?

Thanks. The calculation includes actually completing and sending the forms?

SeniorSam

OK, not too hard to do this yourself and plenty of help on this forum if you have any problems. Good luck.

jcuurthht

SeniorSam said:

OK, not too hard to do this yourself and plenty of help on this forum if you have any problems. Good luck.

Thanks. I guess I was confused by the following:

If there’s no Inheritance Tax to pay and the person died on or after 1 January 2022
You’ll need to report estimates of the estate’s value as part of your probate application. You do not need to also report it to HMRC.
https://www.gov.uk/applying-for-probate/before-you-apply

So the IHT400 forms is still required, but that is sent to the Probate office instead of HMRC?