Inheritance tax, abode.

sevenhills

"If you give away your home to your children (including adopted, foster or stepchildren) or grandchildren your threshold can increase to £500,000."

What does the above mean? If a persons home is included in the estate and then sold and the money goes to both children, is that still classed as being left to the children? With inflation and increasing house values, there must be many more estates subject to inheritance tax.

https://www.gov.uk/inheritance-tax

theoretica

Yes - the extra threshold applies if the property is sold, including if it is sold before death for downsizing or moving into care. 

Smudgeismydog

It refers to the Residence Nil Rate Band, which is up to £175,00 each. When added to the Nil Rate Band of £325,000, you get the £500,000.

There are some caveats though

squirrelpie

As a childless couple, the Residence Nil Rate Band really annoys us.

DIYPhil

Further, if the deceased was predeceased by a spouse, the executors can claim transfers of the spouse’s nil rate band (£325,000) and also their residence nil rate band (£175,000). So, the total threshold for both parents where they transfer their home to direct descendants is £1 million.

I recently submitted the IHT forms for my late dad, who passed away earlier this year, mum passed away 7 years ago. My dad’s house is worth around £650,000, total estate around £750,000, being left to my sister and me. I heard back from HMRC a couple of weeks ago - no IHT to pay.