Requirement to fill in IHT 400?

Avus56

Hi All 

Another IHT 400 question I’m afraid - sadly my father passed away in April this year without a will in place. I am now in the process of gathering all of the information required in order to apply for probate moving forward. 

To put things into perspective my mother and father (both married) have assets totalling £3,080,000 which are held in joint tenancy. My understanding is my late fathers share of £1,540,000 (half of the above) would pass onto my mother who is still alive. The reason why I am having to apply for probate is that my late father also owned a property in his sole name and together with this has cash in savings accounts.

When I have filled in the IHT calculator to see if any inheritance tax is due it came back with the results as per below: 

Assets in the estate: £2,164,224 

Gifts given in the last 7 years £Nil 

Gross estate value for IHT: £2,164,224

Debts owed from the estate: £556,005 (his share only)

Net estate value for IHT: £1,608,219

Reliefs and Exemptions: £1,540,000 (this is based on the assets being in joint tenancy with my mother)

Net qualifying estate value for IHT: £68,219

Based on the above it has said that no IHT is due however I have been told conflicting information that I will still need to fill in an IHT 400 and submit this to HMRC? Please could someone clarify if this is the case? and if not what would be the reason why?

Furthermore, is there a deadline on when I need to apply for probate by or can this be done at anytime? 

I'm hoping Keep_pedalling sees this thread  

Any help would be much appreciated. 

Thank you. 

poppystar

There is a deadline for the IHT payment of 6 months but Probate does not have a deadline AIUI

@Keep_pedalling

Avus56

Thank you, Poppystar  

Keep_pedalling

Under intestacy rules his estate does not all go to his wife if he has sole assets in excess of £322k. 50% of anything above this go to his wife and the other 50% is shared by his children. The house he owns in his own name would have to exceed £972k before IHT would be payable and below this it is still an excepted estate with no IHT return required. 

Did he have no other sole assets such as ISAs?

Avus56

Thank you for your input, Keep_pedalling  

Just to clarify - the house which is in his sole name is worth around £425k which is a BTL with circa £197k in savings which are not in ISA's. 

Based on that and figures given relating to the joint assets in my first post I'm assuming a IHT 400 return will not be required? 

poseidon1

Avus56 said:

Thank you for your input, Keep_pedalling  

Just to clarify - the house which is in his sole name is worth around £425k which is a BTL with circa £197k in savings which are not in ISA's. 

Based on that and figures given relating to the joint assets in my first post I'm assuming a IHT 400 return will not be required? 

How much of your father's debts of £556,000 relates to the BTL  ? Was the jointly held matrimonial home entirely mortgage free?

Avus56

Hi Poseidon 

Around £195k of the £556k is related to the BTL. The jointly held matrimonial home is mortgage free. 

Keep_pedalling

Avus56 said:

Hi Poseidon 

Around £195k of the £556k is related to the BTL. The jointly held matrimonial home is mortgage free. 

Where does the remaining dept come from? Seems a very high number where there is no mortgage on the family home, especially if it is just his share of a joint debt, which is now a sole debt for your mother. 

Avus56

Hi @Keep_pedalling

The remaining debt is spread across other properties which are also BTL and in joint names. The £556k is my father’s share of the debt. 

Keep_pedalling

Avus56 said:

Hi @Keep_pedalling

The remaining debt is spread across other properties which are also BTL and in joint names. The £556k is my father’s share of the debt. 

Thanks for the clarification. Having most of  your wealth tied up in property really makes IHT reduction really difficult for your mother’s estate. As her estate will be well over £2M both residential NRBs will be lost leaving just her NRB + the unused portion of your fathers NRB which will be approximately £210k as under intestacy rules his children will be entitled to about £115k between them.

Might be worth your mother selling his BTL and gifting the proceeds as that property escapes CGT. 

probate_slave

To come back for a moment to the question of requirement to file IHT400 or not, the confusion probably arose over the joint assets figure, which is over the maximum £3m allowed for an excepted estate. But since HMRC only require the deceased's share of joint assets to be included, the estate meets all conditions for an exempt excepted estate and no IHT return is needed.
https://www.gov.uk/hmrc-internal-manuals/inheritance-tax-manual/ihtm06013