Hi there, I'm sure this question has been asked before but despite using the Advanced Search, I was unable to find a similar topic, so please bear with me if that is the case.
It's hopefully a fairly straightforward question. If the deceased (who has a single unused Nil Rate Band of £325k) has a will giving 4/6 of the Estate to his spouse and 1/6 to each of his 2 children (making 2/6 total):
1. How is IHT calculated?
I have had people give me different answers. Needless to say, couldn't find any help at HMRC call centre. If anyone has a number for a department that actually knows the answer to this question and can point me at an IHT manual reference, that would be most useful, feel free to PM!
For simple maths, let's say the estate is worth £600k and there is only cash involved (this is pretty close to the actual facts of the case).
- Estate value is £600k
- So £400k to go to the Spouse
- £100k to each of the children (£200k total)
Does the IHT get calculated on the £200k LESS the Nil Rate Band so NO IHT to pay, OR
Does the Nil Rate Band get deducted first, leaving taxable estate of £275k and then the IHT is calculated somehow pro-rata for the shares of the children only?
2. Is any of the deceased's Nil Rate Band left over to transfer to the Spouse, or is it all used as part of however the IHT is calculated?
If any further information needed to answer the question, please ask, thank you!
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