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    • Keep pedalling
    • By Keep pedalling 15th Apr 18, 10:16 AM
    • 5,683 Posts
    • 6,480 Thanks
    Keep pedalling
    You should also talk the your GCs parents, they are the ones who would be lumbered with a property trust to deal with (unless you appointed expensive professionals) should you die before either child reaches 18.
    • Cardew
    • By Cardew 18th Apr 18, 7:09 PM
    • 27,590 Posts
    • 13,544 Thanks
    Cardew
    The latest updated version of the IHT article(April 2018) is incorrect. It states:

    In the 2018/19 tax year, everyone is allowed to leave an estate valued at up to £325,000 plus the new 'main residence' band of £100,000 giving a total allowance of £425,000.
    So for example, if you leave behind assets worth £500,000 (assuming you have just one property), your estate pays nothing on the first £425,000, and 40% on the remaining £75,000 - a total of £30,000 in tax - if you're not leaving anything to charity.
    It should read for the 2018/19 tax year the new 'main residence' band is £125,000 giving a total allowance of £450,000. etc etc

    How do you contact MSE to get them to correct the article?
    Last edited by Cardew; 18-04-2018 at 7:11 PM.
    • Savvy_Sue
    • By Savvy_Sue 18th Apr 18, 7:58 PM
    • 39,252 Posts
    • 36,212 Thanks
    Savvy_Sue
    The latest updated version of the IHT article(April 2018) is incorrect. It states:

    It should read for the 2018/19 tax year the new 'main residence' band is £125,000 giving a total allowance of £450,000. etc etc

    How do you contact MSE to get them to correct the article?
    Originally posted by Cardew
    You can either click on the Report button of your post and explain you'd like them to correct their article, or you can email forumteam@moneysavingexpert.com and ask them.
    Still knitting!
    Completed: 1 adult cardigan, 3 baby jumpers, 3 shawls, 1 sweat band, 3 pairs baby bootees,
    1 Wise Man Knitivity figure + 1 sheep, 2 pairs socks, 2 hats, 2 balaclavas for seamen, 1 balaclava for myself, multiple poppies, 3 peony flowers, 4 butterflies ...
    Current projects: ready to decrease / decreasing on all parts of the mohair cardigan pattern! but moved onto wrist warmers for friends at Christmas ...
    • mellizo
    • By mellizo 18th May 18, 3:49 PM
    • 7 Posts
    • 2 Thanks
    mellizo
    My grannie (82) has owned one building in NW London for over 20 years, and so by now she has been trapped by the London housing bubble and a potentially huge IHT bill.
    Those are the facts we are dealing with:
    - The property is a terraced house, which is divided into TWO properties, one in the basement, and another in the upper floors.
    - My grandmother lives in the basement floor. It has been her main residence since she moved in with her late husband. She owns the freehold.
    - The upper floor is now occupied by my brother, rent free.
    - Several estate agencies have evaluated the property, and said that the “asking price” for sale will be around 1.450.000 pounds…. BUT
    - The property is in bad shape and a Chartered Surveyor has told us that there is “possible subsidence” and “possible wet rafters”, among many other small problems, so I believe that in case of a valuation for transfer or IHT purposes , the final amount will be much less, around a million or so.
    - My mother is the only inheritor, as there are no other siblings.
    The plan is for my grandmother to transfer her dwelling to my mother, as a potentially exempt transfer. As my grandmother will be giving her main residence to her only child, there will be no CGT, nor Stamp Duty to pay. Is it true? As we understand, this step won’t cost any money on taxes but some paperwork and legal expenses. Are we wrong?
    My mother (who lives in Spain) will then reform the basement and rent the apartment. Will She be obliged to declare that property to the Spanish authorities for tax purposes?
    We know that the rent´s Income Tax will only be paid to the HMRC, but are clueless about the property.
    Meanwhile, my grandmother will move to the upper floor, which will be declared as her main dwelling. If everything goes fine, the next movement will be to transfer the upper apartment again after 7 years or before if the valuation we get about the TWO properties goes below the Nil Rate Band allowance.
    As we believe, we have an Ace in the Nil Rate Band allowance my grandmother estate is entitled, even if she passes away before the notorious 7 years are over.
    We assume that the Nil Rate Band in her case of will be of at least 325.000 + 125.000 pounds, but we can also add up my grandfather`s allowance , who passed away in 2004 and who left all of his estate (the house) to his wife. So another 450.000 might be added up, to a very nice amount of 900.000 pounds. Is that so?

    Do you think this is feasible, or just and elaborate and wishful fantasy? If It is possible, how much do you think it will cost in taxes, paperwork and legal counsel?
    • Keep pedalling
    • By Keep pedalling 18th May 18, 6:26 PM
    • 5,683 Posts
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    Keep pedalling
    First off your GM will never be hit by an IHT bill her estate will. If she survives another 2 years then the combined nil rate and residence nil rate band will add up to £1M

    If the building needs work doing to it, then a better plan would be to sell the basement, move into the upper floors and spend some of the proceeds in getting the house sorted, and setting up an emergency cash fund if she does not have one. Anything over that can be gifted as part of reducing any future IHT bill.

    Under no circumstances should she gift the whole property away if this leaves her with no other substantial assets that may be needed to give her a comfortable old age.

    She should also consider who her estate goes to. If everything is left to your mother then she might be passing on an IHT for her.
    • Cardew
    • By Cardew 18th May 18, 6:30 PM
    • 27,590 Posts
    • 13,544 Thanks
    Cardew

    Do you think this is feasible, or just and elaborate and wishful fantasy? If It is possible, how much do you think it will cost in taxes, paperwork and legal counsel?
    Originally posted by mellizo

    There are far better qualified people on here than I, but here are my thoughts.


    1. Your grandmother cannot gift the house to your mother and continue to live in the property. It is a 'gift with reservation' and will not be a potentially exempt transfer.



    2. Provided the house is left to your mother she will benefit from the £900k ceiling, rising to £1million in 2020. That is assuming your grandfather didn't use any of his nil rate band.



    3. Your mother not living in the house, and renting it will be liable for capital gains tax.


    4. As there are two houses in the building, surely the second property is liable for CGT. It is no different to owning a second house in another part of London.


    5. I wonder how HMRC would view your brother living rent free in a second house. Might it be assessed for a notional income and thus use up her IHT nil rate band.


    Just my thoughts!
    Last edited by Cardew; 18-05-2018 at 6:58 PM.
    • manrow
    • By manrow 21st May 18, 4:53 PM
    • 181 Posts
    • 22 Thanks
    manrow
    We are considering taking out a Family Protection Trust. In the brochure it suggests that this will include protection against IHT, preparing Wills and updating them from time to time, as well as completing Powers of Attorney for both of us.
    As you might imagine there is a one-off capital sum to pay for thess legal services, where the national firm of solicitors will also be Trustees, although all decisions will be made by the family trustees.

    Sounds inviting, anyone any experience of these schemes or are they a scam?
    Be ALERT - The world needs more LERTS
    • johngolfuk
    • By johngolfuk 26th Jul 18, 4:19 PM
    • 1 Posts
    • 0 Thanks
    johngolfuk
    Hi,

    First post on MSE....

    I'd like clarification please on the main residence threshold.

    Dad died in May 2016 (ie before the introduction of the main residence threshold) and left everything to Mum.

    If she dies, is the tax free allowance £325K x 2 + £125K for the main residence allowance? So £775K?

    Or, does dad also qualify for the main residence allowance making the total tax free allowance £900K?

    Many thanks

    John
    • AlwaysLearnin
    • By AlwaysLearnin 26th Jul 18, 8:26 PM
    • 586 Posts
    • 495 Thanks
    AlwaysLearnin
    There are various conditions, but if the position is pretty straight forward then your dad's allowance would probably be transferable if required.

    See:

    https://www.gov.uk/guidance/inheritance-tax-transfer-of-threshold
    • Craighoy
    • By Craighoy 21st Sep 18, 1:45 PM
    • 19 Posts
    • 6 Thanks
    Craighoy
    Joint allowance? Is it possible?
    Hi
    My father in law died in 2001 - he passed everything to his wife. She is now on her very last legs and albeit late we are planning ahead. She is in a home , the house was sold to pay for this but after som initial issues we managed to get the home paid for under the NHS Continuing Healthcare scheme. As such she has a pot of money of around £450000.
    I understand that her Inheritance tax allowance would be £325,000 and by rights her late husbands should also be available - covering the whole amount.
    The issue is that there is no trace of his will. The use of the joint allowance was not announced and implemented until 2007 (I think). By this time he had been dead 6 years and all of those records have gone as at the time they were not needed.
    What can we do to ensure that the joint allowance is available on her estate?
    We have checked the online probate records and there is nothing listed for him , his solicitor was a one man band and has also died.
    Any advice appreciated
    • Keep pedalling
    • By Keep pedalling 21st Sep 18, 8:16 PM
    • 5,683 Posts
    • 6,480 Thanks
    Keep pedalling
    Hi
    My father in law died in 2001 - he passed everything to his wife. She is now on her very last legs and albeit late we are planning ahead. She is in a home , the house was sold to pay for this but after som initial issues we managed to get the home paid for under the NHS Continuing Healthcare scheme. As such she has a pot of money of around £450000.
    I understand that her Inheritance tax allowance would be £325,000 and by rights her late husbands should also be available - covering the whole amount.
    The issue is that there is no trace of his will. The use of the joint allowance was not announced and implemented until 2007 (I think). By this time he had been dead 6 years and all of those records have gone as at the time they were not needed.
    What can we do to ensure that the joint allowance is available on her estate?
    We have checked the online probate records and there is nothing listed for him , his solicitor was a one man band and has also died.
    Any advice appreciated
    Originally posted by Craighoy
    Do not forget that she also has a residence nil rate band of £125k (£150k if she survives beyond the 5th April) so depending on what side of £450k her net estate falls the estate my not need the transferable rate at all.

    Do you know if your father actually had a will.
    • Lemonsqueezer78
    • By Lemonsqueezer78 21st Sep 18, 9:50 PM
    • 303 Posts
    • 363 Thanks
    Lemonsqueezer78
    Hi All

    I was recently diagnosed with cancer and it has led me to think about inheritance tax and whether there is anything I should do to plan for the lowest IHT burden possible.

    My circumstances

    I have a partner - not married - we own a property as Joint Tenants . Property valued at £450,000 - with a joint mortgage on it of around £315,000.

    We have no savings and no debts

    I have a pension with a current value of around £60,000

    I life assurance through my employer (a "death in service" benefit I guess) which pays out 8 times my basic salary - which equates to £575,000 - and the beneficiaries for this are listed with my employer - as follows

    Partner - 55% (£316,250)
    Sister - 15% (£86,250)
    Brother - 15% (£86,250)
    Niece (only 5 yrs old) - 7.5% ( £43,125)
    Nephew (9 yrs old) - 7.5% (£43,125)

    I'd like my partner to get my pension and I believe they are named with my pension provider as my beneficiary.

    I'm happy with the beneficiaries and percentages above for my death in service benefit - as this pays off the mortgage for my partner (+ my pension) with my family getting the rest.

    I don't have a Will but - as per the above - beneficiaries are named with my employer/pension provider and happy for the property to go to my partner as it automatically will.

    So what IHT would be payable on the above - literally just 40% on everything above, over my £325k threshold? Can/should I do anything to lower this?

    What would be the effect (if anything) of marrying my partner? Assume then I would need a Will to ensure that my death-in-service benefit can go to my sister/ brother/ niece/ nephew with no issues or possibility of being challenged?

    I admit to being totally green about this, so any advice would be welcome. Thanks!
    • Savvy_Sue
    • By Savvy_Sue 21st Sep 18, 10:30 PM
    • 39,252 Posts
    • 36,212 Thanks
    Savvy_Sue
    My brain won't cope with sums tonight, but ...

    Marrying your partner would remove from IHT anything you left to her. That might be enough.

    Making a will if you DON'T marry your partner is absolutely essential. Yes, she'll get the house, but it will make everything SO much simpler if you have a will.

    The pension and death in service benefit might be 'in trust' and therefore pass outside your estate, and therefore not liable to IHT. I'd check that.
    Still knitting!
    Completed: 1 adult cardigan, 3 baby jumpers, 3 shawls, 1 sweat band, 3 pairs baby bootees,
    1 Wise Man Knitivity figure + 1 sheep, 2 pairs socks, 2 hats, 2 balaclavas for seamen, 1 balaclava for myself, multiple poppies, 3 peony flowers, 4 butterflies ...
    Current projects: ready to decrease / decreasing on all parts of the mohair cardigan pattern! but moved onto wrist warmers for friends at Christmas ...
    • Keep pedalling
    • By Keep pedalling 21st Sep 18, 11:35 PM
    • 5,683 Posts
    • 6,480 Thanks
    Keep pedalling
    Your death in service benefits and pension should not form part of your estate, so IHT is not going to be an issue.

    The main tax advantage to being married is the ability to transfer the nil rate bands, which is going to help with IHT for your partners estate if you die first. You would need to ask the pension administrators about the effect of marriage on DIS and pension payments.
    • Lemonsqueezer78
    • By Lemonsqueezer78 22nd Sep 18, 12:17 PM
    • 303 Posts
    • 363 Thanks
    Lemonsqueezer78
    Thanks for the replies guys - I'll check out and confirm the situation with the DIS thing with the benefits team at work, but I do recall it is managed through a board of trustees so it does sound like this is the kind of arrangement you describe that doesn't need to be counted as part of the estate for IHT purposes.

    Does anyone happen to know if the beneficiaries of this have to pay tax (capital gains?) on what I leave them?

    Edit: and I'll arrange a Will.
    • Craighoy
    • By Craighoy 22nd Sep 18, 1:33 PM
    • 19 Posts
    • 6 Thanks
    Craighoy
    Do not forget that she also has a residence nil rate band of £125k (£150k if she survives beyond the 5th April) so depending on what side of £450k her net estate falls the estate my not need the transferable rate at all.

    Do you know if your father actually had a will.
    Originally posted by Keep pedalling
    Hi Keep pedalling - thanks for the reply.
    I'm not sure if the Residence Nil band Rate can be applied - she is in a care home and sold her house to fund this 18 months ago so there is no property - its just a lump sum - and I found out yesterday that there are a couple of ISAs as well.
    My father in law did have a will - it was written by his cousins husband who was a solicitor - he died 15 years ago. We know the will said - 'everything to my wife' - his two daughters didn't benefit (one being my wife) and as they recall nor did anyone else.
    Is the will absolutely necessary as proof?
    As he died 6 years before the introduction of this benefit then it seems a little unreasonable to expect it to have been retained.
    • Linton
    • By Linton 22nd Sep 18, 2:01 PM
    • 10,082 Posts
    • 10,416 Thanks
    Linton
    Thanks for the replies guys - I'll check out and confirm the situation with the DIS thing with the benefits team at work, but I do recall it is managed through a board of trustees so it does sound like this is the kind of arrangement you describe that doesn't need to be counted as part of the estate for IHT purposes.

    Does anyone happen to know if the beneficiaries of this have to pay tax (capital gains?) on what I leave them?

    Edit: and I'll arrange a Will.
    Originally posted by Lemonsqueezer78

    Beneficiaries only pay CGT on the difference between probate value and the value when they eventually sell. The estate may have to pay CGT on any increase in value from when you die to that declared for probate but this is usually zero. There is no CGT applied for any increase in value before your death.
    • Keep pedalling
    • By Keep pedalling 22nd Sep 18, 4:35 PM
    • 5,683 Posts
    • 6,480 Thanks
    Keep pedalling
    Hi Keep pedalling - thanks for the reply.
    I'm not sure if the Residence Nil band Rate can be applied - she is in a care home and sold her house to fund this 18 months ago so there is no property - its just a lump sum - and I found out yesterday that there are a couple of ISAs as well.
    My father in law did have a will - it was written by his cousins husband who was a solicitor - he died 15 years ago. We know the will said - 'everything to my wife' - his two daughters didn't benefit (one being my wife) and as they recall nor did anyone else.
    Is the will absolutely necessary as proof?
    As he died 6 years before the introduction of this benefit then it seems a little unreasonable to expect it to have been retained.
    Originally posted by Craighoy
    I think most people do actually hang on tho things like wills as valuable family documents, but not having them does not bar you from claiming it just makes things more difficult for the e executor.

    Selling a house because you move into care does not remove the ability of your executor to claim the residents nil rate band, and in this case there is a transferable Residence nil rate band that can be transferred as well should it be required when the time comes.
    • Craighoy
    • By Craighoy 23rd Sep 18, 11:11 AM
    • 19 Posts
    • 6 Thanks
    Craighoy
    I think most people do actually hang on tho things like wills as valuable family documents, but not having them does not bar you from claiming it just makes things more difficult for the e executor.

    Selling a house because you move into care does not remove the ability of your executor to claim the residents nil rate band, and in this case there is a transferable Residence nil rate band that can be transferred as well should it be required when the time comes.
    Originally posted by Keep pedalling
    Thanks again - It seems then that my wife and sister (who are the executors) will need to get some decent professional help when the time comes as (as you can probably tell) its all a bit of a mystery to us !
    But based on your helpful comments - at least it seems there is some hope that they will be able to avoid most of the tax
    • MrsKatyF
    • By MrsKatyF 24th Sep 18, 3:12 PM
    • 1 Posts
    • 0 Thanks
    MrsKatyF
    Advice Please
    I've been trying to look into inheritance tax and get all the facts but I'm finding it extremely difficult to understand so was hoping someone could advise on our situation and perhaps dumb it down for me a bit.
    Sorry in advance it's quite long. It's actually my mother who needs the advice she and my father owned a house which they were in the middle of selling when he passed away in 2005 my mother continued with the sale and purchase of the slightly smaller house which is in her sole name having inherited all from my father.
    The current house is now worth roughly between £1 million and £1.2 million and she has probably £20K in savings. My eldest brother (there's 3 children in total) still lives with my mother, he has learning difficulties. As it stands at the moment her will divides the estate between the 3 of us and there will be a reasonably hefty tax bill to pay.
    She's now looking at retiring and feels she wont be able to keep up with the household bills. She's concerned about leaving us with lots of tax to pay and she want's to know my eldest brother will be provided for without myself or my other brother going without. The options she's looking at are either:
    1) Selling up and downsizing with my brother still living with her.
    2) Selling up and moving near me (outside London so cheaper) buying a house with an annex for my brother, the main house would eventually become mine as I will continue to look out for my brother. When she sells her current house she would like to "gift" my other brother his potential inheritance.
    She'd like to know what would be best and what the implications would be tax wise and I just don't know what to advise.
    I hope that all makes sense. Any advice/tips would be much appreciated.

    Thank you
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