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Where Taxpayers and Advisers Meet

sorting out parents estate UK and foreign property

worldlyman
Posts: 9
Joined: Sat Feb 10, 2018 1:14 am

sorting out parents estate UK and foreign property

Postby worldlyman » Fri Mar 29, 2019 2:08 am

Sorting out parents estate.

Sadly mother passed away 11 years ago and dad 1 week ago - am I right in thinking the tax free allowance is £325K for each (i.e. £650K) ?

Also, is there an additional £150K for a property that's used as a main residence ? I assumed used once ?

Also, for property abroad (in Pakistan to be specific), unsold - I assume there's no tax ? and if it's sold ?

Thanks

AGoodman
Posts: 785
Joined: Fri May 16, 2014 3:47 pm

Re: sorting out parents estate UK and foreign property

Postby AGoodman » Fri Mar 29, 2019 1:26 pm

Your father's estate should benefit from £650k nil rate band provided your mother left all her assets to him (including any significant gifts made in the last 7 years of her life) so that her entire estate was exempt. If she left any non-exempt legacies, these will reduce the transferable nil rate band.

There is a double additional nil rate band of up to £350k but capped at the value of the residential property passing to descendants (and further capped if either mother or father's estates were greater than £2m).

If your father was domiciled or deemed domiciled here (if he had been resident for more than 15/20 years) his worldwide estate will be subject to IHT.

worldlyman
Posts: 9
Joined: Sat Feb 10, 2018 1:14 am

Re: sorting out parents estate UK and foreign property

Postby worldlyman » Sat Mar 30, 2019 12:49 am

Thanks for the response Goodman.

With regards to the property abroad when do you pay the inheritance tax ? when it's sold or unsold ?

Is it 40% IHT as well ?

Can we ask HMRC/other authorities to sell it if they want tax money ?

worldlyman
Posts: 9
Joined: Sat Feb 10, 2018 1:14 am

Re: sorting out parents estate UK and foreign property

Postby worldlyman » Sat Mar 30, 2019 12:51 am

We were not born in that country and the country has major issues with corruption/landgrabbing and property fraud.

DJ314159
Posts: 47
Joined: Wed Aug 06, 2008 3:34 pm

Re: sorting out parents estate UK and foreign property

Postby DJ314159 » Sun Mar 31, 2019 1:39 pm

Hi AGoodman, did you mean £250k when you said there is a double additional nil rate band up to £350k? We are still in 2018-2019, for which the RNRB is £125k (2x£125k=£250k). The £175k figure is for the year 2020-2021.

AnthonyR
Posts: 268
Joined: Wed Feb 08, 2017 2:33 pm

Re: sorting out parents estate UK and foreign property

Postby AnthonyR » Tue Apr 16, 2019 9:50 am

Thanks for the response Goodman.

With regards to the property abroad when do you pay the inheritance tax ? when it's sold or unsold ?

Is it 40% IHT as well ?

Can we ask HMRC/other authorities to sell it if they want tax money ?
You pay IHT 6 months after the death even if it's unsold. However, for property assets (and a few other things) it's possible to spread IHT over 10 years where the asset is not sold. It's subject to interest on the unpaid amount, but could be a valuable deferral.

Once you have probate (which you will likely also need in Pakistan) you will be able to sell it to raise the cash, but at that point all unpaid IHT spread over 10 years becomes due immediately.

As you say, Pakistan is a difficult country to deal with due to the 'administrative issues' and in my experience clients have had to go there and do special deals with the local authorities to arrange for properties to be signed over into their name....

You mention that your parents were not born there, but if they were Pakistani domiciled there is a very old double tax treaty that can sometimes help in this situation.
Anthony Rogers LLB CTA TEP
Fusion Partners LLP
anthony@fusionpartners.co.uk


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