IHT Advice

Larry12

Hi - my wife and I gifted a property 5 years ago (worth £700K) to our children.  4 years ago we gifted another property into trusts (Worth £700k).

My wife passed away last year and I'm now to work out how much tax may be owed.   

Am I right in thinking nothing is owed owed on the first property and then tapering is applied to the 2nd property?

Keep_pedalling

I am assuming here that both gifts were joint with a 50/50 split and that neither property is your home. The first gift is above her NRB of £325, so £25k is subject to IHT. It is however subject to taper relief. The second gift is all subject to IHT and taper relief applies to that as well.

If she has retained a beneficial interest in either property TR will not apply. 

Keep_pedalling

Back in 2021 you said you owned a house worth £1M and had £500k in savings, has she left her share of these assets to you? 

Larry12

Yes - House and savings is passed to me.

Can taper relief be applied to both gifts?  

Does the £325k allowance get reset only after 7 years?

Keep_pedalling

You can apply taper relief to both gifts as per my previous reply. The first gift gets the 5-6 year relief the second 4-5 years relies. In your wife’s case the 7 year rule would not have been reset unless she survived 7 years from the second gift, the same applies to your estate.

poseidon1

Larry12 said:

Hi - my wife and I gifted a property 5 years ago (worth £700K) to our children.  4 years ago we gifted another property into trusts (Worth £700k).

My wife passed away last year and I'm now to work out how much tax may be owed.   

Am I right in thinking nothing is owed owed on the first property and then tapering is applied to the 2nd property?

You do not mention the nature of trusts for the 2nd property.  Hopefully, none of the trusts ( you used the plural) were discretionary. If so taper relief might not apply since discretionary trusts are chargeable to iht at inception ( at 20%), subject to any prior unused NRB.

Keep_pedalling

poseidon1 said:

Larry12 said:

Hi - my wife and I gifted a property 5 years ago (worth £700K) to our children.  4 years ago we gifted another property into trusts (Worth £700k).

My wife passed away last year and I'm now to work out how much tax may be owed.   

Am I right in thinking nothing is owed owed on the first property and then tapering is applied to the 2nd property?

You do not mention the nature of trusts for the 2nd property.  Hopefully, none of the trusts ( you used the plural) were discretionary. If so taper relief might not apply since discretionary trusts are chargeable to iht at inception ( at 20%), subject to any prior unused NRB.

Good point, and another question to be answered is did the OP and their wife retain any beneficial interest in either property?