Inheritance tax threshold question.

Rusty190

I am attempting to assist an Aunt, at her request, with her Will and estate planning. Aunt is widowed - husband's Grant of Probate documents show that the gross value of his estate was valued at £207,000.00 gross. He left everything in his will to her. They had no children. She is a basic rate tax payer. Am I correct in my assumption that on her death, her estate inheritance allowance before inheritance tax is due will be her £325.00 plus £118,000.00  - the £118,000 she would have inherited from her husband's un-used portion of his allowance?
She is using a Solicitor for her will but we are attempting to educate ourselves a little before the appointment.
Thank you.

Markmywords

Rusty190 said:

I am attempting to assist an Aunt, at her request, with her Will and estate planning. Aunt is widowed - husband's Grant of Probate documents show that the gross value of his estate was valued at £207,000.00 gross. He left everything in his will to her. They had no children. She is a basic rate tax payer. Am I correct in my assumption that on her death, her estate inheritance allowance before inheritance tax is due will be her £325.00 plus £118,000.00  - the £118,000 she would have inherited from her husband's un-used portion of his allowance?
She is using a Solicitor for her will but we are attempting to educate ourselves a little before the appointment.
Thank you.

how have you got £118k as unused?

RAS

Did they or does she own property?

I assume you know that transfers to a spouse do not incur IHT?

Keep_pedalling

Unless her husband used up some of his NRB on non exempt gifts within 7 years of his death her estate would need to be in excess of £650k before IHT kicked in as none of his NRB was used up because anything left to a spouse is covered by spousal exemption.

Rusty190

Markmywords said:

Rusty190 said:

I am attempting to assist an Aunt, at her request, with her Will and estate planning. Aunt is widowed - husband's Grant of Probate documents show that the gross value of his estate was valued at £207,000.00 gross. He left everything in his will to her. They had no children. She is a basic rate tax payer. Am I correct in my assumption that on her death, her estate inheritance allowance before inheritance tax is due will be her £325.00 plus £118,000.00  - the £118,000 she would have inherited from her husband's un-used portion of his allowance?
She is using a Solicitor for her will but we are attempting to educate ourselves a little before the appointment.
Thank you.

how have you got £118k as unused?

I was making the assumption (wrongly I now suspect!) that Uncle would have been allowed £325,000 - minus the £207,000 he left to Aunt =£118.00 remaining.

Rusty190

RAS said:

Did they or does she own property?

I assume you know that transfers to a spouse do not incur IHT?

Yes, she does own a property - now the sole owner but was jointly owned by her and Uncle prior to his death.
She did not have to pay any inheritance tax on his death.

Rusty190

Keep_pedalling said:

Unless her husband used up some of his NRB on non exempt gifts within 7 years of his death her estate would need to be in excess of £650k before IHT kicked in as none of his NRB was used up because anything left to a spouse is covered by spousal exemption.

No non exempt gifts made.

RAS

Rusty190 said:

RAS said:

Did they or does she own property?

I assume you know that transfers to a spouse do not incur IHT?

Yes, she does own a property - now the sole owner but was jointly owned by her and Uncle prior to his death.
She did not have to pay any inheritance tax on his death.

In which case you can add their residential allowances as well, so 2x£325k +2x£175k = £1m

These are not reduced by her inheritance from her husband.

Cairnpapple

They had no children,  so I assume no residential allowance. 

Rusty190

So, is the consensus that anything over £650,000 of her estate, will be subject to inheritance tax?

RAS

If there are no direct descendants, but adopted children and grandchildren would be direct descendants.