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    • Dinsdale1947
    • By Dinsdale1947 9th Feb 18, 11:36 AM
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    Dinsdale1947
    Spouse and IHT
    • #1
    • 9th Feb 18, 11:36 AM
    Spouse and IHT 9th Feb 18 at 11:36 AM
    I am likely to face a situation where my wife's estate incurs significant IHT and is divided between me and others in her family. Oversimplifying, let's say 500,000, nett 430,000. The will divides the estate 50% to me and 25% to 2 others. My share of the estate is free of IHT. I want to understand whether my 50% is before IHT, 250,000 or not (215,000). Do the others, in this case, bear all the IHT? I have googled for hours; but can find no definitive guidance on this, only implied answers. Can anyone point me to a site that lays this out explicitly, please?
Page 1
    • getmore4less
    • By getmore4less 9th Feb 18, 11:48 AM
    • 32,035 Posts
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    getmore4less
    • #2
    • 9th Feb 18, 11:48 AM
    • #2
    • 9th Feb 18, 11:48 AM
    Look up nil rate band, you don't seem to have used that

    On those numbers there is no IHT to pay.

    One way to get an idea on how it works it to complete the IHT forms as they guide you through the steps.
    • Yorkshireman99
    • By Yorkshireman99 9th Feb 18, 12:24 PM
    • 4,147 Posts
    • 3,392 Thanks
    Yorkshireman99
    • #3
    • 9th Feb 18, 12:24 PM
    • #3
    • 9th Feb 18, 12:24 PM
    I am likely to face a situation where my wife's estate incurs significant IHT and is divided between me and others in her family. Oversimplifying, let's say 500,000, nett 430,000. The will divides the estate 50% to me and 25% to 2 others. My share of the estate is free of IHT. I want to understand whether my 50% is before IHT, 250,000 or not (215,000). Do the others, in this case, bear all the IHT? I have googled for hours; but can find no definitive guidance on this, only implied answers. Can anyone point me to a site that lays this out explicitly, please?
    Originally posted by Dinsdale1947
    Sounds like your wife need paid for professional advice on IHT planning specialist. This could save you all far nmore than the advice will cost. You will not find a reliable answer by any other method.
    • nom de plume
    • By nom de plume 9th Feb 18, 2:14 PM
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    nom de plume
    • #4
    • 9th Feb 18, 2:14 PM
    • #4
    • 9th Feb 18, 2:14 PM
    I am likely to face a situation where my wife's estate incurs significant IHT and is divided between me and others in her family. Oversimplifying, let's say 500,000, nett 430,000. The will divides the estate 50% to me and 25% to 2 others. My share of the estate is free of IHT. I want to understand whether my 50% is before IHT, 250,000 or not (215,000). Do the others, in this case, bear all the IHT? I have googled for hours; but can find no definitive guidance on this, only implied answers. Can anyone point me to a site that lays this out explicitly, please?
    Originally posted by Dinsdale1947
    You calculations are incorrect.

    Your 50% would be free of IHT as it is to her husband. The remainder would be subject to IHT calculation but would be under the IHT threshold so no IHT would be due.
    Last edited by nom de plume; 09-02-2018 at 2:19 PM.
    • nom de plume
    • By nom de plume 9th Feb 18, 2:18 PM
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    nom de plume
    • #5
    • 9th Feb 18, 2:18 PM
    • #5
    • 9th Feb 18, 2:18 PM
    Also OP, are any of what you class as your wife's estate actually jointly owned with you? Bank accounts, property, or the like?
    • Tom99
    • By Tom99 10th Feb 18, 3:19 AM
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    Tom99
    • #6
    • 10th Feb 18, 3:19 AM
    • #6
    • 10th Feb 18, 3:19 AM
    There is no IHT if your wife dies before you but you will only inherit 75k of her basic Nil Rate Band because she will have used 250k of it on the other family.
    • Dinsdale1947
    • By Dinsdale1947 15th Feb 18, 10:50 AM
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    Dinsdale1947
    • #7
    • 15th Feb 18, 10:50 AM
    • #7
    • 15th Feb 18, 10:50 AM
    Thank you everyone. I was wrong with my numbers (got sloppy trying to 'simplify') and should have been clearer.
    My wife is in palliative (dementia) care, so I am trying to understand the likely situation of her dying before me. The will will be as it is, no further IHT planning possible.
    I am confident of calculating the IHT (!) and HMRC give good help on that.
    Forgetting the actual numbers, my question is, given there is IHT to pay, is my % share based on the estate before IHT or after? Where can I find an authoritative statement on this?
    Better numbers:
    Estate = 600,000
    20% to me, spouse; 80% to children.
    Nil rate: 375,000 + 600,000*20% = 375,000 + 120,000 = 495,000
    Taxable amount = 600000 - 495,000 = 105,000
    Tax at 40% on 105,000 = 42,000
    Net estate = 600,000 - 42,000 = 558,000

    Do I get 20% of 600,000 or 20% of 558,000?

    Thanks for your patience.
    • getmore4less
    • By getmore4less 15th Feb 18, 12:38 PM
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    getmore4less
    • #8
    • 15th Feb 18, 12:38 PM
    • #8
    • 15th Feb 18, 12:38 PM
    If there is a house and any life interest to you then you need to adjust your numbers.

    also nil rate band is 325k not 375k

    does the will not mention any free of tax legacies as that may require grossing up.
    Last edited by getmore4less; 15-02-2018 at 12:45 PM.
    • nom de plume
    • By nom de plume 15th Feb 18, 2:39 PM
    • 685 Posts
    • 644 Thanks
    nom de plume
    • #9
    • 15th Feb 18, 2:39 PM
    • #9
    • 15th Feb 18, 2:39 PM
    Thank you everyone. I was wrong with my numbers (got sloppy trying to 'simplify') and should have been clearer.
    My wife is in palliative (dementia) care, so I am trying to understand the likely situation of her dying before me. The will will be as it is, no further IHT planning possible.
    I am confident of calculating the IHT (!) and HMRC give good help on that.
    Forgetting the actual numbers, my question is, given there is IHT to pay, is my % share based on the estate before IHT or after? Where can I find an authoritative statement on this?
    Better numbers:
    Estate = 600,000
    20% to me, spouse; 80% to children.
    Nil rate: 375,000 + 600,000*20% = 375,000 + 120,000 = 495,000
    Taxable amount = 600000 - 495,000 = 105,000
    Tax at 40% on 105,000 = 42,000
    Net estate = 600,000 - 42,000 = 558,000

    Do I get 20% of 600,000 or 20% of 558,000?

    Thanks for your patience.
    Originally posted by Dinsdale1947
    On these numbers and with the correct nil rate band of 325k,you would receive the full 20% (120k) and the tax would be calculated on the remainder less nil rate (480k - 325K) so 155k x 40% = 62k so 480k - 62k = 418k to children.

    Are your wife's assets hers and hers only? Without going into intricate detail what do they comprise of? EG a house she and she alone owns, a life insurance policy, shares, premium bonds. Are any in joint names with you?
    Last edited by nom de plume; 15-02-2018 at 2:42 PM.
    • Dinsdale1947
    • By Dinsdale1947 15th Feb 18, 5:16 PM
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    Dinsdale1947
    It's the principle I'm after, so your answer is enough to confirm my expectation; but do you know where I can find definitive information from an official source (no disrespect intended)?
    • Yorkshireman99
    • By Yorkshireman99 15th Feb 18, 6:19 PM
    • 4,147 Posts
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    Yorkshireman99
    It's the principle I'm after, so your answer is enough to confirm my expectation; but do you know where I can find definitive information from an official source (no disrespect intended)?
    Originally posted by Dinsdale1947
    You will have to pay an IHT specialist,
    • nom de plume
    • By nom de plume 16th Feb 18, 11:42 AM
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    nom de plume
    I've tried to find a reference on the Government website but failed dismally. The best I can find is for charitable bequests which is pretty similar in their falling outside of inheritance tax calculations. I dealt with an estate which had a sizeable IHT bill. I paid the charities in full as they were not liable for IHT. Other beneficiaries received reduced sums.

    https://www.gov.uk/donating-to-charity/leaving-gifts-to-charity-in-your-will

    The key wording being "Your donation will..... be taken off the value of your estate before Inheritance Tax is calculated"
    • nom de plume
    • By nom de plume 16th Feb 18, 11:45 AM
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    nom de plume
    A bit hard to get your head around but the second worked example on this page perhaps is more relevant.
    https://www.gov.uk/hmrc-internal-manuals/inheritance-tax-manual/ihtm43002
    • nom de plume
    • By nom de plume 16th Feb 18, 12:28 PM
    • 685 Posts
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    nom de plume
    Hopefully this link will also confirm that IHT is (usually) bourne by those who are not exempt beneficiaries.

    One point to note is whether the Will contains any wording in relation to inheritance tax.

    However, anything passing to the spouse or civil partner of the deceased is exempt (as long as the spouse or civil partner is domiciled in England and Wales).

    ....the recipients of the legacies or bequests, will usually bear the tax, rather than the widow/widower or partner.
    • getmore4less
    • By getmore4less 16th Feb 18, 1:12 PM
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    getmore4less
    It's the principle I'm after, so your answer is enough to confirm my expectation; but do you know where I can find definitive information from an official source (no disrespect intended)?
    Originally posted by Dinsdale1947
    The issue the principle for your example can go out the window if you have not understood the distribution properly.


    this may help

    https://www.gov.uk/hmrc-internal-manuals/inheritance-tax-manual/ihtm26201

    in particular
    https://www.gov.uk/hmrc-internal-manuals/inheritance-tax-manual/ihtm26203
    • Dinsdale1947
    • By Dinsdale1947 9th Mar 18, 12:07 PM
    • 4 Posts
    • 0 Thanks
    Dinsdale1947
    Thanks
    Those links are the ones I wanted. Many thanks.
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