inheritance tax experts?

Ace Modder

Ace Modder

Ace Modder

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Hi guys

I understand that you don't pay any tax up to £325K worth of assets given to you, but after £325K threshold you are taxed 40%.

If you get a house worth £500K for example, how does it work. If you don't have any money to pay the £70K (40% of the last £125K) how do the government get the tax from you?

Do you get the property then realistically have to either sell it, or remortgage part of it for £70K to pay the goverment their tax?
 
Very briefly, as is always the case with tax questions - the devil's in the detail, but the estate as a whole is valued by the executors, to the satisfaction of HMRC and if this is over the £325k threshold, then IHT is payable on the balance. Liabilities of the deceased will be deducted from the estate to arrive at the net balance. The tax is then payable by the executors from the estate using whatever cash/bank balances are available. It could mean selling some assets etc.

Once the tax is paid, then bequests would then be given and the rest of the assets distributed amongst the beneficiaries.

There are exemptions between husband and wife. I've only acted as executor twice on family wills where the assets either passed to a spouse or down to children, where the house was sold and the proceeds distributed.

Seeking advice as an executor can be a valuable and important thing to do.
 
Since the asset is a House, looks like you can arrange to pay in installments over 10 years.

Look at this http://www.hmrc.gov.uk/inheritancetax/paying-iht/yearly-instalments/

Also, not knowing your circumstances, but since 2007 you can transfer any unused Inheritance tax allowance from the first spouse that died to the surviving spouse, so that when they die their allowance can be up to double, so £650,000

(It doesn't matter when the first spouse died, just that the second is after 2007)

Look at http://www.hmrc.gov.uk/inheritancetax/intro/transfer-threshold.htm
 
Freakbro said:
Since the asset is a House, looks like you can arrange to pay in installments over 10 years.

Look at this http://www.hmrc.gov.uk/inheritancetax/paying-iht/yearly-instalments/

Also, not knowing your circumstances, but since 2007 you can transfer any unused Inheritance tax allowance from the first spouse that died to the surviving spouse, so that when they die their allowance can be up to double, so £650,000

(It doesn't matter when the first spouse died, just that the second is after 2007)

Look at http://www.hmrc.gov.uk/inheritancetax/intro/transfer-threshold.htm
Click to expand...

Yes, just had experience of that - £500-600k estate and £0 IHT.
 
Freakbro said:
Since the asset is a House, looks like you can arrange to pay in installments over 10 years.

Look at this http://www.hmrc.gov.uk/inheritancetax/paying-iht/yearly-instalments/

Also, not knowing your circumstances, but since 2007 you can transfer any unused Inheritance tax allowance from the first spouse that died to the surviving spouse, so that when they die their allowance can be up to double, so £650,000

(It doesn't matter when the first spouse died, just that the second is after 2007)

Look at http://www.hmrc.gov.uk/inheritancetax/intro/transfer-threshold.htm
Click to expand...

+1.

Also to take notice of, gifts are exempt from Inheritance Tax, depending on what they may be. Advice from a will expert/tax adviser is beneficial.

http://www.hmrc.gov.uk/inheritancetax/pass-money-property/exempt-gifts.htm
 
Could be a PET without the details.

As always, good financial advice will pay for itself, as much as some regulars here will have you believe otherwise.
 
The inland revenue will take the time to answer questions if you call them for help. You likely won't get an immediate answer, but they do call you back.

I had an obscure issue handling my mum's estate in that my father died in 1972 - back then it was estate duty and the rules were very different - so it was not clear whether any allowance could be transferred on my mum's death.

They were extremely helpful. I was impressed.
 
Ace Modder said:
If you get a house worth £500K for example, how does it work. If you don't have any money to pay the £70K (40% of the last £125K) how do the government get the tax from you?

Do you get the property then realistically have to either sell it, or remortgage part of it for £70K to pay the goverment their tax?
Click to expand...

If you are given a gift and the giver survives 7 years there is no inheritance tax; less than that it is prorataed. Inheritance tax is basically voluntary if you plan in advance and the rate is extremely low by historic standards.

The govt doesn't care how you raise the 70k as long as they get it. Paying a mere 14% tax on a such an expensive property isn't a lot.

Be grateful you have such a rich family that wants to leave you more money than many people would earn in their entire career.
 
momentimori said:
Be grateful you have such a rich family that wants to leave you more money than many people would earn in their entire career.
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Assuming only 40 years working they'd have to be virtually on minimum wage their entire lives. Way to be a ***** about a fairly common issue.
 
momentimori said:
So what?

You're getting a load of money for nothing. Just be grateful you get it and pay the taxman his very small cut.
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Who said anything about what I stand to get? I'm not thinking about what I stand to inherit, i'm thinking about the taxman taking hard earned money that i've earned from my kids! Do you have kids?

Why on earth would you be all for the alternative - it going to the government?

Inheritance tax isn't doing anything to but hitting the working & middle classes these days. It's not stopping the Bourgeoisie son! The people hit are the same ones down today's average street. I don't wish it upon my neighbour or anyone!

Then again i'm not the type to begrudge my fellow neighbour if they did something like buy a nice car. I'd be happy for them, not sit there twitching the curtains and planning the revolution because I had less.
 
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Vanilla said:
Who said anything about what I stand to get? I'm not thinking about what I stand to inherit, i'm thinking about the taxman taking hard earned money that i've earned from my kids! Do you have kids?

Why on earth would you be all for the alternative - it going to the government?

Inheritance tax isn't doing anything to but hitting the working & middle classes these days. It's not stopping the Bourgeoisie son! The people hit are the same ones down today's average street. I don't wish it upon my neighbour or anyone!

Then again i'm not the type to begrudge my fellow neighbour if they did something like buy a nice car. I'd be happy for them, not sit there twitching the curtains and planning the revolution.
Click to expand...

Do many working class folk have estates valued at over £325000 then?
 
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