Over £325 k

sevenhills

A family member may well have more than £325k and may pay inheritance tax.. How do the tax people know?
His estate is split between two children and a grand daughter, so I assume that the £500k limit does not apply?
His house is worth £270K 

bobster2

If he is leaving his estate to direct descendants (children and grandchildren) he also has the residential nil rate band available (£175k). So £500k in total.

km1500

if some is in cash, paintings etc then HMRC won't 'know'  but if in banks accounts etc they will know about it

RAS

is the family member married, never married, widowed or divorced?

Keep_pedalling

It is really a matter of the executors being honest in the first place, but any executor who isn’t would be taking a large risk as HMRC have visibility of people’s bank accounts and property transfer.

Assuming this family member has not been widowed then to avoid / reduce IHT the executor would need to claim the RNRB which means completing a full IHT return and I doubt whether too many people be willing to commit fraud filling those in. Even if they found £100k under the floorboards it is not easy to launder large sums of money. 

sevenhills

Just looking at the Gov web site "People you give gifts to might have to pay Inheritance Tax, but only if you give away more than £325,000 and die within 7 years."

That is confusing, it seems to be saying that if you give away less than £325,000 then that is ok.

"If you give away your home to your children (including adopted, foster or stepchildren) or grandchildren your threshold can increase to £500,000." - so it also includes grandchildren, I didn't realise that.

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

bobster2

sevenhills said:

Just looking at the Gov web site "People you give gifts to might have to pay Inheritance Tax, but only if you give away more than £325,000 and die within 7 years."

That is confusing, it seems to be saying that if you give away less than £325,000 then that is ok.

That line relates to some very specific circumstances - where there is IHT due AND someone has used the entire nil rate bands (£325,000) with gifts before they died.

Under those unusual circumstances the recipients of the gifts might have to may IHT rather than the estate. But it's usually the estate that pays.