IHT - When is it paid

[DJ314159]

This is related to my previous question. Say someone has £500k in liquid assets and a house worth about £850k. The assets are sorted out fairly quickly and are below the £650k ( 2 x £325k threshold). But say the house takes a year or more to sell. The sale takes the total estate over the limit of any reliefs. Is anything due on the initial £500k, knowing what's coming, or is tax only paid on the sale of the house? Thanks.

[pawncob]

Tax is due on the total estate. Payable 6 months later.

[DJ314159]

Thanks! So that would be 6 months after the house sale then?

[maths]

No.

Estate on death worth 500k + 850k ie 1,350,000.

If (per your other post) father entitled to 900k allowances then IHT due is 40% of [1,350,000 - 900,000].

IHT due 6 months after end of month of death.

[DJ314159]

Thanks. I feared so

[AGoodman]

But IHT in relation to land is payable in 10 annual instalments, (balance payable on an earlier sale).

So you should only have to pay 10% of the IHT on the property in order to obtain grant of probate. Allocation of NRB/RNRB between land and non-instalment assets is best achieved using the HMRC calculation sheet or similar.

[maths]

IHT on chargeable estate of 450k i.e. 180k.

This is allocated:

[500/1350 ] x 180k = 66,667

[850/1350] X 180K = 113,333

Assuming instalment basis applies then IHT due when probate taken out is = [66,667 + [10% x 113,333] = 78,000.

[DJ314159]

Thanks for the additional information. It's extremely useful.