This site uses cookies. By continuing to browse the site you are agreeing to our use of cookies. To find out more about cookies on this website and how to delete cookies, see our Cookie Policy.
Analytics

Tools which collect anonymous data to enable us to see how visitors use our site and how it performs. We use this to improve our products, services and user experience.

Essential

Tools that enable essential services and functionality, including identity verification, service continuity and site security.

Where Taxpayers and Advisers Meet

Inheritance Tax

angels333
Posts:1
Joined:Wed Apr 29, 2020 1:32 am
Inheritance Tax

Postby angels333 » Wed Apr 29, 2020 1:39 am

Re my mother recently died - my sister is in UK dealing with the estate - I am in the USA. We may have to pay Inheritance Tax.
As sister is taking charge of this. in UK -
how am I supposed to pay my half that I owe?
Who is supposed to inform me how much I owe and how I pay it and where?
Does HRMC inform me what I owe?
Or does her accountant or sister tell me what I owe?
Does she get a reference no. from HRMC and I use that one?
thank you for any help on this

AGoodman
Posts:1738
Joined:Fri May 16, 2014 3:47 pm

Re: Inheritance Tax

Postby AGoodman » Thu Apr 30, 2020 11:16 am

1. The estate (in the form of the executors/administrators administering the estate) pays the whole of the inheritance tax (IHT), not the beneficiaries/heirs. The heirs just receive their share of the balance after payment of all taxes and other liabilities. You would not normally have to contribute payment unless (a) the estate is illiquid and you don't want to sell the estate assets or (b) you can't sell assets until you have probate so need to pay IHT in the meantime in order to obtain probate.
2. The IHT is self-assessment (i.e. the executors/administrators have to work it out) but HMRC will send you a statement once you have submitted the tax return. Depending on timing, you may have to pay the tax on the basis of your self-assessment before you receive the statement. You have 6 months to pay.
3. If there is no will and your mother is a widow then the likelihood is that you and your sister (and any other siblings) are first in line to be the administrators. You can instruct a professional to calculate the tax for you. This could be an accountant or a solicitor (who could also obtain probate if required).
4. Yes, you need an HMRC IHT reference number to pay (which is then put on the IHT tax return): https://www.gov.uk/paying-inheritance-tax/get-a-reference-number

https://www.gov.uk/inheritance-tax

It's difficult to say more without knowing more, including which forms you need. It's possible there is no IHT to pay in which case it may be a simpler form, which is only required if you need probate.

The main issues that will effect it are:
1. value of your mother's estate and whether it includes a property
2. whether she was a widow and, if so, whether your father's estate was taxable
3. whether your mother was domiciled in the UK (yes if she was here for 17 years or probably if otherwise of UK origin). If not domiciled, the location of her assets.
4. the nature of the assets - you only have to pay 10% of the IHT on land up front - paying the rest when you sell or over 10 years
5. any legacies she left to charity
6. any significant gifts she made in the last 7 years of her life.

Bear in mind there could also be lifetime taxes to pay such as income tax - or possibly refunds.

DavidTreitel
Posts:271
Joined:Thu Aug 16, 2012 4:31 pm

Re: Inheritance Tax

Postby DavidTreitel » Sun May 03, 2020 8:23 am

Sorry to hear of your loss. From a US perspective you now own an interest in a foreign estate. Until the estate is distributed to you, you will report this each year to the IRS on Form 8938. Should you receive more than US$100,000 you will additionally file Form 3520 with the IRS. If you have signature authority over the estate, this will reported by you to the US Treasury on your annual FBAR.

Before any assets are distributed to you, it would be prudent to make sure you understand any US tax consequences.


Return to “Inheritance Tax, IHT, Trusts & Estates, Capital Taxes”