How much IHT am i liable?

izawa

Widowed parent here, need to figure out figure out how much will my inheritance beneficiaries will be liable to IHT

Here are some estimated figures

UK	20000
overseas savings	40000
Life insurance	500000
Shares	3000
Pension	55000
------------------------
Total incl pension	618000
Total excl pension	563000

My other half inheritance limit was fully utilised so cant take advantage of that. I do not own a home. I do not have any loans.

My understanding is if the limit is 325,000 then this means my beneficiaries would need to pay 40% on
Scenario A  (if pensions are accounted) -- 618000 - 325000 = 293000 . IHT @ 40% = 117k
Scenario B  (if pensions are not accounted) -- 563000 - 325000 = 238000. IHT @ 40% = 95k

I believe it is scenario B that will most likely apply.

I am aware that I could take advantage of trusts or annual gifting limit but at this stage I just want to clarify if my understanding re IHT is correct?
 

Albermarle

If it is a DC ( defined contribution ) pot then under current rules it will not be part of your estate. You should not mention it in your will. You should make sure you have filled in the expression of wishes form for the pension provider, so they know who you wish the beneficiary of the pension to be.

You do not mention a house/home? do you not own one ?

Also to be correct, your estate will pay inheritance tax , not your beneficiaries. Money will be distributed to them after IHT has been paid. 

izawa

Albermarle said:

If it is a DC ( defined contribution ) pot then under current rules it will not be part of your estate. You should not mention it in your will. You should make sure you have filled in the expression of wishes form for the pension provider, so they know who you wish the beneficiary of the pension to be.

You do not mention a house/home? do you not own one ?

Also to be correct, your estate will pay inheritance tax , not your beneficiaries. Money will be distributed to them after IHT has been paid. 

I do not own a home, thanks for highlighting , i updated the original post.

Keep_pedalling

izawa said:

Albermarle said:

If it is a DC ( defined contribution ) pot then under current rules it will not be part of your estate. You should not mention it in your will. You should make sure you have filled in the expression of wishes form for the pension provider, so they know who you wish the beneficiary of the pension to be.

You do not mention a house/home? do you not own one ?

Also to be correct, your estate will pay inheritance tax , not your beneficiaries. Money will be distributed to them after IHT has been paid. 

I do not own a home, thanks for highlighting , i updated the original post.

Assuming you inherited  everything from your husband then your estate will be able to claim his transferable NRB giving it a total exemption of £650k. If the life insurance is written in trust then that does not form part of your estate.

May I ask why you have such high life cover and such a small amount of assets, as this is an unusual set up? You also say you don’t own a house, but you did back in 2022 so what happed to it

https://forums.moneysavingexpert.com/discussion/6353172/pay-off-mortgage-or-leave-in-offset#latest

Sorry for these questions but it is not possible to answer you question without having a clear picture of your circumstances, and doing things like disposing of your home will impact your potential IHT liability 

[Deleted User]

Keep_pedalling said:

izawa said:

Albermarle said:

If it is a DC ( defined contribution ) pot then under current rules it will not be part of your estate. You should not mention it in your will. You should make sure you have filled in the expression of wishes form for the pension provider, so they know who you wish the beneficiary of the pension to be.

You do not mention a house/home? do you not own one ?

Also to be correct, your estate will pay inheritance tax , not your beneficiaries. Money will be distributed to them after IHT has been paid. 

I do not own a home, thanks for highlighting , i updated the original post.

Assuming you inherited  everything from your husband then your estate will be able to claim his transferable NRB giving it a total exemption of £650k. If the life insurance is written in trust then that does not form part of your estate.

May I ask why you have such high life cover and such a small amount of assets, as this is an unusual set up?

You say you don’t own a house, is this because you have always rented or have you previously disposed of your former home. Sorry for all the questions but without a better grasp of the facts it is difficult to give good advice.

The op has stated that late spouse’s ‘inheritance limit was fully utilised’, presumably meaning the NRB?

izawa

Keep_pedalling said:

izawa said:

Albermarle said:

If it is a DC ( defined contribution ) pot then under current rules it will not be part of your estate. You should not mention it in your will. You should make sure you have filled in the expression of wishes form for the pension provider, so they know who you wish the beneficiary of the pension to be.

You do not mention a house/home? do you not own one ?

Also to be correct, your estate will pay inheritance tax , not your beneficiaries. Money will be distributed to them after IHT has been paid. 

I do not own a home, thanks for highlighting , i updated the original post.

Assuming you inherited  everything from your husband then your estate will be able to claim his transferable NRB giving it a total exemption of £650k. If the life insurance is written in trust then that does not form part of your estate.

May I ask why you have such high life cover and such a small amount of assets, as this is an unusual set up? You also say you don’t own a house, but you did back in 2022 so what happed to it

https://forums.moneysavingexpert.com/discussion/6353172/pay-off-mortgage-or-leave-in-offset#latest

Sorry for these questions but it is not possible to answer you question without having a clear picture of your circumstances, and doing things like disposing of your home will impact your potential IHT liability 

Hello, I post various questions on behalf of my friends, relatives. Half the threads i open are not even for myself. Sorry for confusion. The husband IHT was given to descendants.

MarzipanCrumble

https://www.moneysavingexpert.com/family/inheritance-tax-planning-iht/#:~:text=However, the amount that's taxable,for example, nieces and nephews.

Suggest you read as you may be confusing leaving a main residence to children or direct other descendents.

izawa

MarzipanCrumble said:

https://www.moneysavingexpert.com/family/inheritance-tax-planning-iht/#:~:text=However, the amount that's taxable,for example, nieces and nephews.

Suggest you read as you may be confusing leaving a main residence to children or direct other descendents.

Hi , there is no residence to pass so cant avail high RNIB limit