IHT Gross & Net and excepted estates
Mark2spark
Posts: 2,306 Forumite
in Cutting tax
Hi Guys,
Looks like I've got a bunch of red tape to contend with, so am after some opinions please.
My Mother died in December 17, my father died many years before, she was a widow until death.
Her Estate is simple, house with gross value circa 375k, cash and bonds approx 15k, total gross value 390k.
LESS: Mortgage 120k approx, funeral expenses 5k.
No other assets or debts.
Net value approx 265k.
CLEARLY well within the 325k IHT threshold, so no IHT to pay.
Furthermore, the will leaves everything to the children, who are all still alive, which adds a further 100k to the IHT threshold.
*But*, there doesn't appear to be any way of applying this extra 100k to the IHT205 form, and making the Estate an excepted one?
So IHT 400 beckons...
Technically my father, having left everything to my mother, will have a doubling up of allowance to use, however we aren't sure whether his estate was ever dealt with 'properly', so might be opening up a can of worms there.
Any advice?
Thanks.
Mark.
Looks like I've got a bunch of red tape to contend with, so am after some opinions please.
My Mother died in December 17, my father died many years before, she was a widow until death.
Her Estate is simple, house with gross value circa 375k, cash and bonds approx 15k, total gross value 390k.
LESS: Mortgage 120k approx, funeral expenses 5k.
No other assets or debts.
Net value approx 265k.
CLEARLY well within the 325k IHT threshold, so no IHT to pay.
Furthermore, the will leaves everything to the children, who are all still alive, which adds a further 100k to the IHT threshold.
*But*, there doesn't appear to be any way of applying this extra 100k to the IHT205 form, and making the Estate an excepted one?
So IHT 400 beckons...
Technically my father, having left everything to my mother, will have a doubling up of allowance to use, however we aren't sure whether his estate was ever dealt with 'properly', so might be opening up a can of worms there.
Any advice?
Thanks.
Mark.
0
Comments
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Since your estate at £265k is will within £325K why not just apply for that using IHT205?
How long ago did your father die? And what do you mean by technically he left everything to your mother?
If your father died after the early 1970's but there was no will and your mother inherited everything then it is easy to claim his NRB. There is no need for his estate to have been dealt with via probate.0 -
Hi Tom.
Firstly, my father died in 1987. I was too young at the time to know whether he had a will or not, or how it was dealt with. My mother simply continued living in the house with us children. The mortgage was paid off by my fathers firm's pension scheme (he died before retirement).
I would use IHT205 no probs, except when it gets to box H, it refers you to the notes of IHT206, which say that if the gross value is higher than the threshold of 325k (which it is) then you have to use IHT400.
However, I've now come across IHT435, residence nil rate band, which seemingly can be added onto IHT400, making it simpler? Although the Will doesn't actually say that the children inherit 'the residence', it's up to the executors to convert the residence to cash and then share it out accordingly.
Hope I'm not over reading into things. As I said, it's a simple estate really.
Thanks.0 -
It's ridiculous really, many of todays youngsters will have around 500,000 value houses, but 400,000 mortgages, no where near IHT thresholds. The IHT forms should take this into account if they want to cut down on the bureaucracy.0
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You could use IHT205 + IHT217 to add your father's NRB. You could look up to see if probate was granted for your father.
IHT400 +[FONT=Verdana, sans-serif] ancillary forms, [/FONT]is not that complicated its just spread over a number of different forms.0 -
Yes you do need to use IHT400, but filling in IHT435 is not nessasary as your mother!!!8217;s estate does not need either of your father!!!8217;s transferable allowances to avoid IHT, so you would simply be make pointless work for yourself.
IHT205 is used only for simple estates where none of the numbers reach the single IHT threshold, once you go over that HMRC want far more detail.
Edit, why has this site started turning apostrophes into meaningless symbols and numbers?0 -
Keep_pedalling wrote: »Edit, why has this site started turning apostrophes into meaningless symbols and numbers?
It is a known issue. Techy guys are working on it.I'm a Forum Ambassador on The Coronavirus Boards as well as the housing, mortgages and student money saving boards. I volunteer to help get your forum questions answered and keep the forum running smoothly. Forum Ambassadors are not moderators and don't read every post. If you spot an illegal or inappropriate post then please report it to forumteam@moneysavingexpert.com (it's not part of my role to deal with this). Any views are mine and not the official line of MoneySavingExpert.com.0 -
Thanks Guys.
It might seem obvious, but just to be clear, IHT is only payable if the net amount left, (after the mortgage has been repaid), is above the threshold for IHT?
Thanks0 -
Mark2spark wrote: »Thanks Guys.
It might seem obvious, but just to be clear, IHT is only payable if the net amount left, (after the mortgage has been repaid), is above the threshold for IHT?
Thanks
Yes that's right.0
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