Requirement to fill in IHT 400?

poseidon1

probate_slave said:

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

Only thing I would add is since father apparently died intestate with net personal assets exceeding the £322,000 statutory legacy due to widow, half of the excess  of £105,000 is required to be shared with the children (around £50k).

 This obviously affects father's transferable NRB going forward unless the children execute a deed of variation of the intestacy to ensure mother receives all of the assets. In the scheme  of things DOV along these lines seems sensible.

Agree Keep_pedalling, the size of mother's estate will eliminate the residential nil rate bands, so only £650k of NRBs available ( assuming DOV above) to shelter the £3 million estate.

Would suggest if mum is young enough to commence substantial gifting, she could give away as much cash as she thinks she can afford to chip away at the iht exposure.

As for the BTLs a little more complex if they all have built up substantial taxable gains which would otherwise be eliminated on mother's death. Perhaps look at the property/s showing least gain to see if it is worthwhile triggering CGT at up to 28% and gifting proceeds now, to save 40% IHT in future.

Given the amounts involved, if the family does not already retain a competent tax adviser ( Chartered Accountant) with estate planning nous, good time as any to seek one out.

probate_slave

poseidon1 said:

Only thing I would add is since father apparently died intestate with net personal assets exceeding the £322,000 statutory legacy due to widow, half of the excess  of £105,000 is required to be shared with the children (around £50k).

I read from the OP's figures that the net estate after debts is only £68,219 and thus goes entirely and tax-free to the widow.

poseidon1

probate_slave said:

poseidon1 said:

Only thing I would add is since father apparently died intestate with net personal assets exceeding the £322,000 statutory legacy due to widow, half of the excess  of £105,000 is required to be shared with the children (around £50k).

I read from the OP's figures that the net estate after debts is only £68,219 and thus goes entirely and tax-free to the widow.

Per OP, personally owned assets of the deceased are cash of £197k, BLT property £425k against which there is a £195k mortgage.

Net personal assets therefore £427k against which the statutory legacy will be applied. Not sure of the basis upon which OP arrived at his £68,219 figure unless the figures he gave for personally owned assets/liabilities of the deceased were not as he indicated.

probate_slave

I feel this thread needs wrapping up. It's not that the OP gave incorrect figures, but rather that HMRC's IHT calculator gave an incorrect calculation (or was misapplied).
As Poseidon suggests, debts on joint assets cannot be used to relieve personal assets. The share of joint debt (£361k) can only be applied to the share of joint assets (£1,540k) giving £1,179k which then attracts fulls spousal relief.
Fortunately this doesn't change the excepted status since the net chargeable estate (£53.5k by my calculation) is below the NRB.