Inheritance tax when siblings left house

V3cash

If you inherit a house jointly as siblings.
house sells for £370
does each person pay inheritance tax?

YBR

I believe the estate pays inheritance tax (before the funds are distributed).

Devongardener

Any inheritance tax due depends on the deceased person’s total estate value and personal circumstances.  If IHT is due it’s paid before any funds are distributed to beneficiaries,  so they don’t pay inheritance tax.  However if it later transpires that there was any deprivation of assets arranged to avoid IHT, then the beneficiaries could be required to pay.

V3cash

My husband is the executor so would be working out if IHT is due.
There won’t be much in way of savings due to funeral expenses and care home fees.
it will just be house.
so they would value house before it sold then pay inheritance tax if appropriate.
i used a calculator on HL website which said nothing is due if house was valued between £370,000 and £390,000

Cornish_mum

I agree with the previous posters the estate owes IHT not the beneficiaries. However it must be paid before the estate can be distributed.

I understand that if IHT is due before an asset is sold (to make funds available to pay the tax due, by the estate); then the beneficiaries can opt to lend the estate the monies to pay IHT, to avoid having to pay HMRC interest on the tax the estate owes. This can occur when the estate mainly consists of a property without cash assets.

Just something to bear in mind if you are being asked to pay your share of IHT now. 

V3cash

great 👍 that’s all understood and really useful thanks,we likely can pay if needed.
however that’s not really the question. 

Do we need to pay on that amount?

Keep_pedalling

If that is all that is in the estate there will be no IHT as the estate has both the NRB and residential NRB giving a total exemption of £500k. If the deceased had been widowed then the estate will have up to £1M in exemptions with any unused transferable NRBs.

If they were widowed it is better to use the NRB plus transferable NRB, then the NRB + residential NRB as this avoids having to do a IHT return.

Linton

V3cash said:

great 👍 that’s all understood and really useful thanks,we likely can pay if needed.
however that’s not really the question. 

Do we need to pay on that amount?

The siblings dont pay.  The estate should pay any tax due prior to distribution of the assets (including the house).  I am  not sure exactly what your question means - if a house valued at £370K is part of the estate then it is potentialy liable to IHT. What other amount is there?

Was the deceased the parent of the siblings? Was the deceased a widow/widower?  If so and there are no significant assets in addition to the house there wont be any IHT due anyway.

jackieblack

Keep_pedalling said:

If they were widowed it is better to use the NRB plus transferable NRB, then the NRB + residential NRB as this avoids having to do a NRB. 

Could you explain what "having to do a NRB" means, please?

Keep_pedalling

jackieblack said:

Keep_pedalling said:

If they were widowed it is better to use the NRB plus transferable NRB, then the NRB + residential NRB as this avoids having to do a NRB. 

Could you explain what "having to do a NRB" means, please?

Sorry, I got distracted and had a senior moment there. I have corrected it to say IHT return.

SVaz

There is a personal iht allowance of £325k + a residence nil rate band of up to £175k , meaning that an estate worth £370k with the house worth over that £175k amount AND it gets left to kids/grandkids,  has £500k  before IHT is due.
So Nothing to pay. 
If the deceased had inherited the estate from their Spouse,  it’s doubled to £1 million. 

I’m assuming that your husband is one of the siblings and inheriting from his parent