Inheritance tax thresholds

lurch3591

I am the sole owner of my house, where I live with my long term partner. In my will I have divided my estate equally between my 4 children and my partner. With inheritance tax in the news lately, and thresholds being discussed, I am wondering if the £500k threshold will apply to the portion I have left to my children, or will the whole estate be subject to the £325k threshold? 

Keep_pedalling

Your estate should be able to claim the RNRB, however it is almost certain that being married or in a civil partnership is going to be a better option.

For example if you split your estate 50/50 and the house is worth £350k and total estate £500k their will be no IHT to pay but a full IHT return will be needed and all of your NRB and RNRB will be used up. Your children will then probably have a CGT liability to deal with when your house is eventually sold.

If you were married or in a CP, you could leave your house to your children through an immediate post death interest trust, with your partner having a life time interest. This provides security for your partner and your children’s inheritance and it also does not use up your RNRB or part of your NRB as it is covered through spousal exemption.

This could also be beneficial to your estate should your partner die first as your estate could then have up to £1M in exemptions.

km1500

if you leave a house or part of a house to a direct descendant than the whole estate has the 500k allowance