Inheritance tax allowances for children

Greenpanda1972

Hi, I am looking for advice regarding my fathers estate.
His wife recently passed away leaving him £140,000, taking his assets over the £325,000 ITA. Would the money his late wife left him be excluded from his allowance to be passed on to myself?. Thank you for any help.

Ayr_Rage

If the £140,000 was left solely to him then it is part of your father's estate when he passes.

DRS1

But he can inherit her NRB so his nil rate band can increase to £650k.  Maybe more if there is a house which he leaves to his children.

Albermarle

No, but she will have passed on her £325K nil rate allowance.
So a larger allowance than the actual amount of money passed on.

Inheritance tax: thresholds for 2025/26 - MoneySavingExpert

Keep_pedalling

Sounds like your father’s estate is way below £650k that 2 times the NRB would cover and if he owns a home his total exemptions could be up to £1M, so IHT is not an issue to worry about. 

Greenpanda1972

His late wife left him that money and the house went to her daughter which was worth £320,000.
He has sold his home and lives with me, his assets would come to about £550,000. I’m grateful for any help, thank you.

Keep_pedalling

Greenpanda1972 said:

His late wife left him that money and the house went to her daughter which was worth £320,000.
He has sold his home and lives with me, his assets would come to about £550,000. I’m grateful for any help, thank you.

In which case nearly all her NRB was used up with only £5k left to transfer, but under the downsizing rule he can still claim the residential NRB and the transferable NRB so IHT should still be avoided.

I have assumed here that his wife’s executors did not complete a IHT return in order to claim her RNRB rather than use up so much of her NRB. 

What was the value of his home?

DRS1

This sounds like one of those cases where husband and wife have each been married to someone else before.  That raises the question of whether the wife was a widow before she remarried and if she had inherited any NRB from her first husband.

Keep_pedalling

DRS1 said:

This sounds like one of those cases where husband and wife have each been married to someone else before.  That raises the question of whether the wife was a widow before she remarried and if she had inherited any NRB from her first husband.

Yes, good point, although it is the  OP’s father’s status that is importantly in this case. If has been widowed twice then the transferable NRB can also come from his first spouse.