IHT Inheritance Tax Help

PHANTOM1125

Good Evening

I wonder if anyone can help. I am currently doing IHT forms and was wondering about the IHT tax rate in this scenario.

Father died in 2020 and left 50K to his son in his will and the rest of the estate to his wife including the house. Mum died this year (4 years on) and the total estate is worth 1.2 million say. So the IHT allowance mum has is the full 1 million. So we have 40% tax to pay on the 200K that much we know. What about the 50K though. Is that taxable at what they call a tapered rate which would be 24% (4 years)

Thanks in advance for any help.

Keep_pedalling

Your mother’s estate does not have the full £2M exemption because £50k of the transferable NRB was used up with the bequest to his son, so assuming the net estate is £1.2M then IHT will apply apply to £250k of the estate.

Taper relief only applies to gifts and then only gifts over £325k.

Did either of your parents make any non exempt gifts in the 7 years before their deaths?

poseidon1

PHANTOM1125 said:

Good Evening

I wonder if anyone can help. I am currently doing IHT forms and was wondering about the IHT tax rate in this scenario.

Father died in 2020 and left 50K to his son in his will and the rest of the estate to his wife including the house. Mum died this year (4 years on) and the total estate is worth 1.2 million say. So the IHT allowance mum has is the full 1 million. So we have 40% tax to pay on the 200K that much we know. What about the 50K though. Is that taxable at what they call a tapered rate which would be 24% (4 years)

Thanks in advance for any help.

If father left £50k to son in the will, this used part of father's transferable NRB leaving only £275k on mother's demise ( taper relief entirely irrelevant here)

Total NRBs on mother's death therefore are £1 million less £50k = £950k

Therefore taxable estate at 40% is simply £1.2 million less £950k = £250k  - ie not £200k at 40%.

PHANTOM1125

Thank you very much for your very quick comments.

Keep pedalling I assume you meant 1million exemption.

I think this is what I suspected that it would be at 40% tax but thought I would ask the forum. Its all new to me.

Keep_pedalling

PHANTOM1125 said:

Thank you very much for your very quick comments.

Keep pedalling I assume you meant 1million exemption.

I think this is what I suspected that it would be at 40% tax but thought I would ask the forum. It’s all new to me.

Sorry yes £1M.