Inheritance Tax

MarlowMallard

Basically yes:  if your main house is £350k or over and you leave it to children/grandchildren,  you should have £1M, minus whatever he left to people other than you or charities. There's no IHT between spouses/civil partners (or charity donations) so what he left to you doesn't matter;  anything he left to people other than you or charities, or gave away less than 7 years before passing, will get subtracted from his NRB. Then you have your own NRB, plus whatever wasn't used from his. 

LL_USS

@MarlowMallard your explaination is very clear, thank you very much - I got the formula from guidance online, yet only with this explanation I can see the nuances much better. 

So, hypothetical example of someone with the main residence of 600K and, say, 400K other assets - and if they pass away (this is the second dealth between a married couple) the NRB (combined, as in the case of all unused by the first spouse, and all unused by the second spouse) for the main residence is 350K plus 400K other assets is under the NRB for things other than the main residence. Though the total asset is 1mil, the 600K-350K=250K of the main residence is still subject to IHT, right?

MarlowMallard

I think there's no IHT in your case above. Combining the two spouses there's 350k in "main residence" (which you can only use for main residence left to children/grandchildren).  Plus 650k for anything at all, including any extra of main residence minus 350k.      So if the main residence is over 350k you have 1M total, or if the main residence is 250k you have 900k total because you've "lost" 100k of the main-residence bit.   If the main residence is 350k or over, and the  main residence plus everything else is under 1M, and the main residence is left to children/grandchildren,  and the first to die left everything to spouse (and they were not divorced at the time), there's no IHT to pay.   

LL_USS

@MarlowMallard I seeee..... Fantastic! Even better than I thought, I should not worry about this any more.

Thank you very much for your examples and explanations.You could well teach personal finance or law at uni :-) !!

Regarding this detail: Combining the two spouses there's 350k in "main residence" (which you can only use for main residence left to children/grandchildren) - it only means the property left for children/ grandchildren (in the will or just by default as there's no other beneficiaries) has only been used as the main residence, right? And say, for e.g. if between the first dealth and the second dealth of the two spouses, the property has changed (moving from one place as the main residence to another place, again, as the main residence by the surviving partner), there's no impact on this 350K NRB between two spouses?

MarlowMallard

Thanks. I'm pretty sure you are OK changing the main residence, but I'm not 100% sure, so given the amount of money in question I'd recommend a short consultation with a tax professional. 

LL_USS

@MarlowMallard thank you very much. I was just curious. I think I have got enough information to make plan for my own situation, thanks again for your help.