inheritance tax and bonds with profits

[CQ]

My father passed in 2003 and everything was passed on to my mothers name with no inheritance tax.
Firstly is our inheritance tax threshold when my mother passes 325,000 pounds or 650,000 pounds please? I am not clear on this.

My dad left six bonds with profits for my sister and I. He set them up in 1999-2000
We closed three in 2009 as a gift from my mother - would they be due for inheritance tax within seven years of my mum passing?

If we don't close the other three until my mum passes will we still have to pay inheritance tax on them? or are they inheritance tax free?

thank you for your time

[tax_schmax]

Your question is a little confusing. You Dad left everything to your Mum, yet you say he left you and your sister some bonds? We need to get this right before we can answer your other questions.

[CQ]

sorry -

yes my dad left everything to my mum in 2003

except 6 bonds with profit to me and my sister

[CQ]

Yes I am a little confused myself:) - as these bonds were put in my mothers name, as well as my sister and I in 2003-4.
thank you for your time

[tax_schmax]

If the bonds were left to you and your sister, your father used some of his nil rate band. You need to find out how much the bonds were worth when your father died. You need to find out the policyholder name on the bond, not the life assured.

[CQ]

thank you
all I can say is that on the Norwich Union policy (and probably all of the policies)
my mum and dad are settlors
and my sister and I are beneficiaries

[tax_schmax]

If they are settlors, the bonds are written under trust. They will have used some of your fathers nil rate band. How much went into them?

[CQ]

around 150K in policies in 2003 I believe
so it reduces threshold now ?
so in 2003 it was 240K and add that to 325K and then minus 150K
is that correct?
thank you for your help

[Peter D]

Not quite, It is the percentage of unused NRL times the applicable NRB at the DOD added to youe Mums NRB so 240-150 = 90 that's 37.5% unused so 325 times 37.5% = 121.875K plus 325K so 446.875K.
I am a bit confused by "We closed three in 2009 as a gift from my mother" But they appear to be held in trust for you anyway so how can she gift them. Regards Peter

[CQ]

This is what I/we were not sure of - we closed three down in 2009
so do we say then that the money is a gift from 2009 with seven years before my mothers passing, to lower the inheritance tax on it?
Or did that gift start from 1999 when it was set up or the gift start from 2003 when my dad died?

Or now that you say the threshold is 466,875K that is all we have to concern ourselves about?
Do we have to say she gifted it to us in 2009 on paper to allow for the 7 years afterwards, or is that totally unnecessary now?

Its all a little confusing to us and thank you so much for explaining everything so we understand it. Your time is much appreciated.