Estimating IHT

My mum died recently leaving no will but a house and some savings.  My question is on how much to estimate to HMRC on the value of the house.  If I provide an estimate of £400k then 40% is payable on £75k = £30k.  Then if the house sells for £500k a further 28% is payable on the £100k gain due to CGT.  Is this right?  So in total I would pay £58k?

If so then I'm better of at giving HMRC a lower valuation as if I tell them £500k then I'd have to pay £175k x .40 = £70k.


Thanks.
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  • edited 14 January at 3:38PM
    SeniorSamSeniorSam Forumite
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    edited 14 January at 3:38PM
    Sorry for your loss. If your father has already dies and you are dealing with the final estate, then you ill need an accurate valuation, or be able to justify the value by quoting nearby, similar property sales.  In any event, there will not be any inheritance tax ans your mother has an allowance of £325,000 plus her residential allowance. 
    In addition, if all your fathers estate passed to your mother, then there will be the additional allowance of his nil rate band and residential allowance.

    Please advise on the position so that further information can be given as this is not the case if parents were divorced or single. The laws of intestacy also apply regarding the distribution of the estate and the person appointed to deal with the estate will have a legal responsibility to act correctly.
    I'm a retired IFA who specialised for many years in Inheritance Tax, Wills and Trusts. I cannot offer advice now, but my comments here and on Legal Beagles as Sam101 are just meant to be helpful. Do ask questions from the Members who are here to help.
  • YazminaYazmina Forumite
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    SeniorSam said:
    Sorry for your loss. If your father has already dies and you are dealing with the final estate, then you ill need an accurate valuation, or be able to justify the value by quoting nearby, similar property sales.  In any event, there will not be any inheritance tax ans your mother has an allowance of £325,000 plus her residential allowance. 
    In addition, if all your fathers estate passed to your mother, then there will be the additional allowance of his nil rate band and residential allowance.
    None of this applies in this case.  I've read through the info on gov.uk and the only allowance is the £325k.  I have had three valuations from estate agents that vary, so the £400k estimate is a rough average.
  • ThrugelmirThrugelmir Forumite
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    I'd recommend that you obtain a valuation through a RICS surveyor for probate purposes. A copy of their report can be submitted to the HMRC when you apply for probate. Saves any hassle. When the property finally sells , if the price has risen considerably then the estate maybe liable to CGT. Any fees incurred can be claimed against the estate before the proceeds are distributed. 
  • YazminaYazmina Forumite
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    Any fees incurred can be claimed against the estate before the proceeds are distributed. 
    Would this include the surveyor fees, estate agents and the council tax?  There are no exemptions for empty houses in the borough.

    Thanks.
  • Keep_pedallingKeep_pedalling Forumite
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    Yazmina said:
    SeniorSam said:
    Sorry for your loss. If your father has already dies and you are dealing with the final estate, then you ill need an accurate valuation, or be able to justify the value by quoting nearby, similar property sales.  In any event, there will not be any inheritance tax ans your mother has an allowance of £325,000 plus her residential allowance. 
    In addition, if all your fathers estate passed to your mother, then there will be the additional allowance of his nil rate band and residential allowance.
    None of this applies in this case.  I've read through the info on gov.uk and the only allowance is the £325k.  I have had three valuations from estate agents that vary, so the £400k estimate is a rough average.
    Why do you think the residential NRB does not apply? Her estate will definitely qualify for it so her tax free allowance will be £500k if she is not a widow.
  • edited 14 January at 6:59PM
    thegreenonethegreenone Forumite
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    edited 14 January at 6:59PM
    Others will correct me if I'm wrong..... but if the house is being passed down to a direct descendant there is an additional allowance?  175k?
  • edited 14 January at 7:06PM
    p00hsticksp00hsticks Forumite
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    edited 14 January at 7:06PM
    Yazmina said:
    Any fees incurred can be claimed against the estate before the proceeds are distributed. 
    Would this include the surveyor fees, estate agents and the council tax?  There are no exemptions for empty houses in the borough.

    Thanks.

    It's not an general 'empty house' exemption that you are concerned with - there is an Class F exemption that applies when a property has been left empty becasue the council tax payer has died - it ri\uns from the date of death until six months after probate has been obtained unti lthe proeprty is sold or occupied.
    The link below is for mis-Sussex council but my understanding is that this is an England wide exemption and not applicable at the whim of indovidial councils

  • YazminaYazmina Forumite
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    Others will correct me if I'm wrong..... but if the house is being passed down to a direct descendant there is an additional allowance?  175k?
    The house was not left to me in a will. I am the sole beneficiary as the only child of a single mother.
  • Keep_pedallingKeep_pedalling Forumite
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    Yazmina said:
    Others will correct me if I'm wrong..... but if the house is being passed down to a direct descendant there is an additional allowance?  175k?
    The house was not left to me in a will. I am the sole beneficiary as the only child of a single mother.
    It does not need to be left in a will, the RNRB can still be claimed if inheriting under intestacy rules.
  • Keep_pedallingKeep_pedalling Forumite
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    On you point about IHT and CGT, if you under estimate the actual value but sell for a a lot more shortly after probate HMRC will be looking to adjust the IHT valuation rather than letting you get away with paying CGT instead. 

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