Inheritance tax. How much?

Sea_Shell

Flugelhorn said:

The order of things is:
Apply for probate which includes valuing the estate

Pay any IHT - as mentioned above this could be a significant sum and as there is little cash available then this will have to be in the instalments - they won;t give the probate until the first installment is paid

When you have probate then you can look at selling the house 

Who is obliged to stump up the first deposit if there isn't enough cash in the estate?

What % do they usually want?

They'd be able to reclaim it from the liquidated estate, eventually.

Kitchen_Gardener

Me and my sister 

Kitchen_Gardener

What if no-one has enough cash to pay inheritance tax 

Flugelhorn

usual thing is that it has to be borrowed in the form of a loan if no-one has the cash available 

Kitchen_Gardener

Well my sister is skint and my son is 17. What if no-one can get a loan

Keep_pedalling

Her executors are going to have to submit a IHT return and pay at least 10% of the IHT bill before you can apply for probate. If between you you can loan the estate enough to pay that first instalment then that will speed things up.

As the first step I would suggest you get the house valued, and because the estate will owe IHT that really needs to be a paid for valuation from a RICS surveyor. 

theoretica

There are special loans just for this - secured on the house and paid direct to the taxman.

Flugelhorn

Kitchen_Gardener said:

Well my sister is skint and my son is 17. What if no-one can get a loan

You aren't skint - you have  a share in a £800K estate, in fact if your sister is wanting to buy you and your son out then she must have some income / assets - you just need to go through the process to access it - google "IHT Executor loans" and take it from there. 

NannaH

IHT HAS to be sorted within 6 months or fines start building up.
40% of £300k is £120k.
Over 10 years it will be £12000+ interest yearly. 
If you stand to inherit £300k+,  I would think you have a good chance of a loan with your bank for a year ot two’s instalments to give you time to sell,  there may even be companies who specialise in it. 

Make sure you properly insure the unoccupied house, you’ll have to either drain down the central heating ( not ideal with the coming Winter, or keep the heating above 12°- you’ll get 6 months leeway with Council tax but will have to pay after that. 

Edited to add :  There Are Companies who will give you a loan,  a quick google threw up a fair few 😉

NannaH

I just found this from a law site : 

”Where executors and beneficiaries are unable to cover the cost of inheritance tax and a bank loan is not an option, HMRC may agree to the issue of a grant of credit. HMRC will require a professional undertaking that inheritance tax will be paid once assets are sold and may even require confirmation that a purchaser has already been found. As such, this option will usually only be available when you have a legal representative acting on your behalf”