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Where Taxpayers and Advisers Meet

NRB,RNRB and PET

Jason123456
Posts:74
Joined:Wed Oct 11, 2017 1:53 pm
NRB,RNRB and PET

Postby Jason123456 » Sun Mar 28, 2021 4:51 pm

Husbands assets = Investments £350k,+ Residential Property = £400k/2 (T-in-C) = £200k
Spouse assets = Ditto

Husband makes gift of £50k to son and dies 2yrs after gift made.
Spouse inherits deceased estate of £550k-£50k = £500k.....

Spouse dies 1yr. after receiving above inheritance of £500k...,
leaving estate valued at £550+ £500k = £1050k to son

Question 1.) In the above circumstances am I correct in thinking that the IHT Allowance that will be applied to this inheritance will be £1000k-£50k = £950k,...therefore IHT will be applied to £1050k-£950k =£100k at 40% = £40k

Question 2.) if my thinking on Qu.1) is correct,Is the £40k of IHT to be paid by the Estate or by the Benificiary (the son)?

maths
Posts:8507
Joined:Wed Aug 06, 2008 3:25 pm

Re: NRB,RNRB and PET

Postby maths » Sun Mar 28, 2021 6:59 pm

Q1 Correct

Q2 Estate pays.

Jason123456
Posts:74
Joined:Wed Oct 11, 2017 1:53 pm

Re: NRB,RNRB and PET

Postby Jason123456 » Sun Mar 28, 2021 7:19 pm

Thank you maths....

Can you tell me at what stage of the process of settling the estate is IHT paid by the Executors?

maths
Posts:8507
Joined:Wed Aug 06, 2008 3:25 pm

Re: NRB,RNRB and PET

Postby maths » Sun Mar 28, 2021 7:36 pm

IHT on mother's estate is due to be paid to HMRC by executors within 6 months of end of month of mother's death (assuming no claim is made to pay in instalments over 10 years).

Jason123456
Posts:74
Joined:Wed Oct 11, 2017 1:53 pm

Re: NRB,RNRB and PET

Postby Jason123456 » Sun Mar 28, 2021 7:42 pm

Thanks again,...

Is there some action that is required before executors have access to the estate in order to pay IHT?.......until your previous post I thought payment had to be made to HMRC before Executors were given access to estate...

maths
Posts:8507
Joined:Wed Aug 06, 2008 3:25 pm

Re: NRB,RNRB and PET

Postby maths » Sun Mar 28, 2021 7:55 pm

Access to the estate assets can only be made after probate has been obtained which in turn requires that IHT on the estate is paid first.

This is a problem ie executors can't get to estate assets to then use them to pay IHT. Often a beneficiary may lend IHT to executors to pay IHT and/or executors seek to borrow from a bank.

My earlier post stated the deadline for IHT payment if interest was to be avoided due to late payment.

Jason123456
Posts:74
Joined:Wed Oct 11, 2017 1:53 pm

Re: NRB,RNRB and PET

Postby Jason123456 » Sun Mar 28, 2021 8:02 pm

Thank you,.....that is the area I was unclear about!......and you have answered the uncertainty I had..most appreciated.

Jason123456
Posts:74
Joined:Wed Oct 11, 2017 1:53 pm

Re: NRB,RNRB and PET

Postby Jason123456 » Mon Mar 29, 2021 10:07 am

One final point of clarification......because NRB is reduced after first death, no IHT is due at first death?

Jason123456
Posts:74
Joined:Wed Oct 11, 2017 1:53 pm

Re: NRB,RNRB and PET

Postby Jason123456 » Mon Mar 29, 2021 12:07 pm

Access to the estate assets can only be made after probate has been obtained which in turn requires that IHT on the estate is paid first.

This is a problem ie executors can't get to estate assets to then use them to pay IHT. Often a beneficiary may lend IHT to executors to pay IHT and/or executors seek to borrow from a bank.
Would it be in order if prior to pending death that a Gift was made to the Benificiery/Executor to cover this IHT cost?

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

Re: NRB,RNRB and PET

Postby AGoodman » Tue Mar 30, 2021 11:07 am

Gift or loan is fine


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