Do I need to complete IHT 400

moedeeb

Father died in 2007 and used £150k of his nill rate band by passing his share of the house to children. The total estate value for probate was £240k. So 90k was inherited by surviving spouse.

Now mother has died with total estate of 50% home worth 300k and 80k cash and investments. No gifts or other complications. So value approx £380k

In reality there will be no inheritance tax due as there is nill rate band of £325k and residence allowance of £175 k. We also have 50% or £162.500 of fathers nill rate band.

I hoping to DIY probate but I will get legal help if I need to fill in the IHT 400 and schedules

Can this qualify as an expected estate and allow only the Probate ?

p00hsticks

My understanding is that you need to complete IHT400 - and possibly others such as IHT402 - if you are claiming the residential NRB (I'm just about to go through the process myself for my mother and have initially identified a large number of IHT forms that I potentially need to complete into order to both use my late fathers unused NRB and both RNRBs)

Keep_pedalling

Did your father’s will give your mother the right to remain in the house or did it leave his half of the property outright to his children?

This is important as if it was the former (as any sensible will should do) you and your siblings did not inherit his share of the property, legal ownership would go into an immediate post death interest trust and your mother would be the beneficial owner. This would mean none of his NRB would have been used and the whole property would form part of her estate for IHT purposes.

No IHT would be payable in either case, but if half the house was in trust the value of her estate is £680k so you will need to use her residential NRB which will require a full IHT return to be made.

If you and your siblings do own half the house then her estate is £380k can be covered by her NRB plus the transferable NRB from your father, so an IHT return will not be required, but the downside is that you will all be facing a CGT liability on the £150k gain in value of of your share of the house since you inherited it.

poseidon1

In theory if your mother's estate is only £380k and you do have 50% of your father's transferable NRB available, then this would qualify as an excepted estate avoiding the need to complete IHT 400.

You would utilise the online probate application process but only after running the online IHT calculator to ascertain the gross and net value of the estate for probate purposes.

However, you do need to address @Keep_pedalling's query regarding the supposed gift of 50% of the house to you and siblings in 2007.

If this was instead an IPDI trust for your mother ( with right to occupy) with you and siblings as trustees/ remaindermen, then your mother's estate becomes £680k and therefore outside the excepted estate criteria.

Suggest you carefully review your father's will to determine exactly what occured. I have noted from some of your earlier posts a somewhat hazy understanding of trusts and their effects.

HedgeHogHarry

Since 1st Jan 2022, an estate can qualify as excepted (no IHT400 needed, probate application only) even when claiming TNRB, provided you're claiming 100% of a single deceased spouse's unused band, i.e. the whole 100% transfers. It sounds like in this case only 50% transferred, so the estate is unlikely to meet the excepted estate conditions. Where less than 100% of the TNRB is being claimed, you fall outside the excepted estate rules and IHT400 plus IHT402 is required, even though the final tax bill should be zero.

The IHT400 and all the schedules is daunting / kafkaesque but it's worth having a look at it yourself first when you're feeling up to it, as probate can get expensive. You could always pay for an hour or two of legal advice on the immediate post-death interest (IPDI) trust point @Keep_pedalling raised, but at least then you're paying a solicitor for advice, not form filling.

buddy9

https://forums.moneysavingexpert.com/discussion/comment/82071717#Comment_82071717

The change was actually the opposite way. 

Prior to 2022, the whole of the TNRB had to be available. Since 2022 the criteria for an excepted estate can be achieved with a percentage of the TNRB.

moedeeb

Thanks to all replies, I have decided to consult a solicitor with trust experience on the general approach and then get further help if needed.