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Where Taxpayers and Advisers Meet

Inheritance tax,could somebody please give me some advice

wilko73
Posts:2
Joined:Mon Jan 11, 2021 1:24 pm
Inheritance tax,could somebody please give me some advice

Postby wilko73 » Mon Jan 11, 2021 1:30 pm

I have been looking after my mother for years as she has dementia which is now advanced,I live in the family home and always have and I'm worried about the future concerning inheritance tax,as I would like to stay in the family home and not have to sell it when it comes to to probate etc as thsi will depend on IHT.I'm an executor of mum's will.The house is left to me as the only child as per mums will.I have been looking back at who is mentioned on the deeds and found the home was transferred to my mother in 1995 as that's when my dad became ill with cancer and he must have thought that would put mum on a more secure footing so it must have been just his name on the deeds before that,he died in 1999. I'm now wondering does this effect any IHT rules as I when the time comes I was going to use his nil rate band to add to mums and to take us over the house value so no IHT would be due.He left everything in his estate to mum.
If anyone has any knowledge I would be greatful.

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

Re: Inheritance tax,could somebody please give me some advice

Postby AGoodman » Mon Jan 11, 2021 2:56 pm

That's a common scenario and no, it should not be a problem. Assuming your mother does not make any substantial gifts in her last seven years, your father did not make substantial gifts other than to your mother, she leaves you the property and the property is worth £275k or more, her nil rate band will be:

£325,000 Nil rate band
£325,000 Transferable nil rate band
£175,000 Residence nil rate band
£100,000 Transferable residence nil rate band (£100k because your father died before 2017)
£925,000 Total.

Incidentally, you can also pay IHT on land in ten annual instalments (10% of the tax relating to the house a year plus interest) so that gives you more time to pay. You only need pay the first instalment within 6 months.

wilko73
Posts:2
Joined:Mon Jan 11, 2021 1:24 pm

Re: Inheritance tax,could somebody please give me some advice

Postby wilko73 » Mon Jan 11, 2021 3:12 pm

Thanks I have been so worried about this,I thought the house transfer could have thrown up all sorts of problems.

Lee Young
Posts:2707
Joined:Wed Aug 06, 2008 3:26 pm
Contact:

Re: Inheritance tax,could somebody please give me some advice

Postby Lee Young » Thu Jan 14, 2021 12:27 pm

Actually the carried forward residence ni lrate band will also be £175,000, therefore making £1million total nil rate band allowance available against the estate.
Lee Young
Solicitor, Chartered Tax Adviser and Trust and Estate Practitioner


Partner, Frettens LLP
lyoung@frettens.co.uk
01202 491701

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

Re: Inheritance tax,could somebody please give me some advice

Postby AGoodman » Fri Jan 15, 2021 12:47 pm

Quite right.

I would put the RNRB rules in any top 10 of impenetrable legislation. It really needn't have been so complicated.


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