[Football] Inheritance Tax question

[Is it PotG?]

it is traditional for someone to have died for IHT to apply.

Mandatory I'd have thought.

 

[drew]

Sigh .... so hopefully for one final time ..... and using an example ( putting aside clever tax tricks ) .....

Someone dies with say £2m of assets. The IHT is based on those assets / estate / dead persons wealth - i.e. after nil rate deductions the tax is paid on the WHOLE amount - i.e. the dead person effectively pays it. It is paid BEFORE the inheritors get any of it.

Using the argument both of you have put forward would mean that the £2m estate was divided between say 10 people then no IHT would be paid because only "inheritors pay the IHT". Divide it between say three people and each would pay IHT above the nil rate band. In reality it's paid on the total estate and therefore not by the 'inheritors'.

On the basis that dead people can't pay anything how does work. It's semantics because the estate is the financial value of what a deceased has left behind. As soon as that person dies, the estate belongs to the beneficiaries, it's just a process of probate to confirm the value and then division by reading of the will before they get their hands on it. The tax still comes out of the collective value of the estate now owned by the beneficiaries.

 

[drew]

Covered partially by [MENTION=3711]Driver8[/MENTION] above, but if it helps;

Each person has a NRB of £325,000. Married couples can effectively join their NRBs together to create an allowance of £650,000.

In addition to this, the Main Residence Nil Rate Band was introduced a couple of years ago, which stipulates that if you are leaving your main residence to direct descendants in your Will then you will also qualify for a further £175,000 each (£350,000).

Therefore, for married couples with children who are main beneficiaries of the will, in most cases you will have a total allowance of effectively £1million.

There are a few caveats and exceptions but that is the broad guidelines.

Feel free to PM if I can help any further - I work as an IFA.

Worth adding that it's irrelevant as to what the IHT threshold was when the first partner in the marriage died, as long as they didn't use any of their IHT allowance, the threshold for them is what it is today rather than when they died.

 

[Eeyore]

Sigh .... so hopefully for one final time ..... and using an example ( putting aside clever tax tricks ) .....

Someone dies with say £2m of assets. The IHT is based on those assets / estate / dead persons wealth - i.e. after nil rate deductions the tax is paid on the WHOLE amount - i.e. the dead person effectively pays it. It is paid BEFORE the inheritors get any of it.

Using the argument both of you have put forward would mean that the £2m estate was divided between say 10 people then no IHT would be paid because only "inheritors pay the IHT". Divide it between say three people and each would pay IHT above the nil rate band. In reality it's paid on the total estate and therefore not by the 'inheritors'.

That was my experience. I did the admin start to finish.

Of course, worth pointing out that liabilities of the estate are subtracted from the assets to form the amount for consideration for IHT.

I sent the solicitor a balance sheet with a net asset value and they took it on from there.

Once all the assets were turned into cash, and IHT matters confirmed, I then paid the beneficiaries.

Best thing the OP can do is see a solicitor. The initial consultation and legal work was only £1.5k. The OP can do the rest themself.

 

[Mellotron]

Worth adding that it's irrelevant as to what the IHT threshold was when the first partner in the marriage died, as long as they didn't use any of their IHT allowance, the threshold for them is what it is today rather than when they died.

Correct. I couldn't think off the top of my head how to word that bit.

 

[Ding Dong !]

Bit of a minefield.

Parents estate was £730K Tax paid was circa £500
Uncles estate was £1M Tax paid was circa £276,000 !!!!

Obviously mitigating circumstances for each but still a crazy difference despite the estate value difference and taxes paid

 

[Jim in the West]

That was my experience. I did the admin start to finish.

Of course, worth pointing out that liabilities of the estate are subtracted from the assets to form the amount for consideration for IHT.

I sent the solicitor a balance sheet with a net asset value and they took it on from there.

Once all the assets were turned into cash, and IHT matters confirmed, I then paid the beneficiaries.

Best thing the OP can do is see a solicitor. The initial consultation and legal work was only £1.5k. The OP can do the rest themself.

If you have time on your hands, you don't necessarily need a solicitor. I did the whole thing for one of my aunts recently, and am now going through the process for my Dad's estate. There are copious forms to complete, but it's relatively straightforward. One thing that might be worth investigating is making an adjustment to the will to facilitate charitable donations. You WILL need a solicitor for that, but if you amend the deceased's will so that at least 10% of the net estate is left to charity, then the inheritance tax rate on the whole estate falls to 36%. It can mean that the tax savings virtually pay for the charitable donations.

 

[beorhthelm]

On the basis that dead people can't pay anything how does work. It's semantics because the estate is the financial value of what a deceased has left behind. As soon as that person dies, the estate belongs to the beneficiaries, it's just a process of probate to confirm the value and then division by reading of the will before they get their hands on it. The tax still comes out of the collective value of the estate now owned by the beneficiaries.

the beneficiaries do not own the estate, it goes to probate, tax is paid, then they posses their part of the inhertiance.

 

[Eeyore]

If you have time on your hands, you don't necessarily need a solicitor. I did the whole thing for one of my aunts recently, and am now going through the process for my Dad's estate. There are copious forms to complete, but it's relatively straightforward. One thing that might be worth investigating is making an adjustment to the will to facilitate charitable donations. You WILL need a solicitor for that, but if you amend the deceased's will so that at least 10% of the net estate is left to charity, then the inheritance tax rate on the whole estate falls to 36%. It can mean that the tax savings virtually pay for the charitable donations.

I knew I'd be good at calling in assets (I tooth-combed my Dad's files and found an obscure pension from the 70s that covered the solicitors fees !) and I was thorough in researching the liabilities (equity release etc).

The forms for IHT and probate, nah, I didn't fancy that. At least if a solicitor does it you know that HMRC are less likely to play silly buggers. The admin was quite calming really. A nice focus. But actual legal bits- not for me.

 

[PILTDOWN MAN]

Sigh .... so hopefully for one final time ..... and using an example ( putting aside clever tax tricks ) .....

Someone dies with say £2m of assets. The IHT is based on those assets / estate / dead persons wealth - i.e. after nil rate deductions the tax is paid on the WHOLE amount - i.e. the dead person effectively pays it. It is paid BEFORE the inheritors get any of it.

Using the argument both of you have put forward would mean that the £2m estate was divided between say 10 people then no IHT would be paid because only "inheritors pay the IHT". Divide it between say three people and each would pay IHT above the nil rate band. In reality it's paid on the total estate and therefore not by the 'inheritors'.

I did know that just being a pain!!

 

[warmleyseagull]

I know Inheritance tax is set at £325,000 but if in a will the house , say value of £200,000 and have other savings of £200,000 is left to the children, is it included in the total of £400,000.
Or is the total for inheritance tax increased to £500,000 ?

Phew - many making this more difficult than it needs be: see https://www.gov.uk/inheritance-tax/passing-on-home, which was immediately available on a search for 'inheritance tax on home'.

 

[Surrey Phil]

I am very sceptical as to why the government have to make the whole thing so bloody complicated. Assume it’s so they can get their hands on your money!

 

[beorhthelm]

I am very sceptical as to why the government have to make the whole thing so bloody complicated. Assume it’s so they can get their hands on your money!

you say that but its pretty simple to completely avoid.

 

[drew]

the beneficiaries do not own the estate, it goes to probate, tax is paid, then they posses their part of the inhertiance.

But isn't Probate merely another way of saying the estate is being held in trust by the Government pending distribution?

 

[Nitram]

Phew - many making this more difficult than it needs be: see https://www.gov.uk/inheritance-tax/passing-on-home, which was immediately available on a search for 'inheritance tax on home'.

There is so much useful information on the gov sites, and not that difficult to understand, and something I used in dealing with an estate.