IHT question

UnsureAboutthis

I've been looking around MSE and other places for a while re IHT

I'm married, and we are both retired.
We both gave away property and cash to our children but that was just over 7 years ago,
so does not count, am I correct?

Since the last lot of substantial gifts to our children, we both give away to 3k each per tax year to our
children and grandchildren. I'm assuming this won't be counted as it is in the allowance

Our main home is with about 400k
We have three BTL flats and we have just finished paying the mortgages on them. These are worth
about 200k each.

The cash in banks/premium bonds and a conservative figure on our car, jewellery, furniture etc is 150k

I'm aware that a spouse is allowed to pass  on to the other half the tax-free their assets.

As the IHT stands, when we are both not here and pass on the properties to our children and grandchildren, what will the tax rate be and on what amount?

I've looked at IHT tax calculators but I find them confusing as they do not allow joint estate valuations.

Andy_L

£1 million tax free allowance 
40% tax on anything above that

Assuming there's no change between now & then

poseidon1

UnsureAboutthis said:

I've been looking around MSE and other places for a while re IHT

I'm married, and we are both retired.
We both gave away property and cash to our children but that was just over 7 years ago,
so does not count, am I correct?

Since the last lot of substantial gifts to our children, we both give away to 3k each per tax year to our
children and grandchildren. I'm assuming this won't be counted as it is in the allowance

Our main home is with about 400k
We have three BTL flats and we have just finished paying the mortgages on them. These are worth
about 200k each.

The cash in banks/premium bonds and a conservative figure on our car, jewellery, furniture etc is 150k

I'm aware that a spouse is allowed to pass  on to the other half the tax-free their assets.

As the IHT stands, when we are both not here and pass on the properties to our children and grandchildren, what will the tax rate be and on what amount?

I've looked at IHT tax calculators but I find them confusing as they do not allow joint estate valuations.

On the numbers you quote you have a £1,150,000 joint estate.

With two NRBs ( £650,000) and two Residence NRBS ( £350,000), first £1 million of joint estates is IHT exempt.

Remaining £150,000 taxable at 40% therefore £60,000 tax.

Madeinireland101

also - you only have one £3k you can each give away each year so just in case you are giving it to more than one child / grandchildren  you need to be aware. You can gift the £3k from the previous tax year if you haven’t used that - but can only go back one year 

GrumpyDil

Although if you are gifting 3k per year out of income it would potentially be covered under the regular gifts out of income exemption. You would need to keep accurate records to make sure that could be evidenced by your executors and it would need to be paid put if income and not capital (I believe). 

Keep_pedalling

GrumpyDil said:

Although if you are gifting 3k per year out of income it would potentially be covered under the regular gifts out of income exemption. You would need to keep accurate records to make sure that could be evidenced by your executors and it would need to be paid put if income and not capital (I believe). 

The gifts from income exemption has to be from surplus income and you need to keep good records of both gifts and expenditure to enable your executors to be able to claim this without them having to trawl though 7 years of bank accounts. Download a copy of IHT 403 to se3 the level of detail required.

https://assets.publishing.service.gov.uk/media/5f60b44cd3bf7f7234487bf0/IHT403-05-20.pdf

It sounds like the OP may have misunderstood the £3000 pa exemption rule if they are giving each child and GC £3k each rather than £3k in total, so they really should look at whether this can be covered by gifts from excess income. 

UnsureAboutthis

Thank you all.
The 3k each year is sent via our current accounts stating "Gift to (Childs/grandchild's name/initials)
I'm also aware re 250 pound gifts to other children

What would the tax be if our estate was worth close to 1.5 million - the increase would be in cash as I'm expecting close to 400k from my parent's estate as they have left me and my brother 400k each in cash/isa's and premium bonds - they rented a property.

Stubod

..40% of 500k which is £200k

artyboy

And make sure you keep the estate below £2m otherwise you'll get the double whammy of having the extra nil rate band tapered away.

DT2001

UnsureAboutthis said:

Thank you all.
The 3k each year is sent via our current accounts stating "Gift to (Childs/grandchild's name/initials)
I'm also aware re 250 pound gifts to other children

What would the tax be if our estate was worth close to 1.5 million - the increase would be in cash as I'm expecting close to 400k from my parent's estate as they have left me and my brother 400k each in cash/isa's and premium bonds - they rented a property.

If you do not need/want some/all of the inheritance you can (I think with other beneficiaries’ agreement) amend the will and pass directly to your children/grandchildren to avoid IHT.

Keep_pedalling

DT2001 said:

UnsureAboutthis said:

Thank you all.
The 3k each year is sent via our current accounts stating "Gift to (Childs/grandchild's name/initials)
I'm also aware re 250 pound gifts to other children

What would the tax be if our estate was worth close to 1.5 million - the increase would be in cash as I'm expecting close to 400k from my parent's estate as they have left me and my brother 400k each in cash/isa's and premium bonds - they rented a property.

If you do not need/want some/all of the inheritance you can (I think with other beneficiaries’ agreement) amend the will and pass directly to your children/grandchildren to avoid IHT.

You can give your inheritance away through a deed of variation but It does not need the permission of other beneficiaries.