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married couple's inheritance tax allowance

(6 Posts)
whataboutbob Thu 26-Jan-17 18:04:25

I understand IHT is contentious but i am hoping for some information from those who understand this. My mum died in 1994 leaving about £30 000 (to me and my brother). My father died 3 weeks ago, again leaving everything more or less split down the middle. However his estate is much bigger and would attract IHT. Is it right that the two estates can be bundled into one and IHT would be paid on the 2 estates but the tax free allowance would be double what it would be for a single person eg £650 000 rather than £325 000? Please let me know if I am on the wrong tracks here.

kath6144 Thu 26-Jan-17 19:42:34

My understanding is that the first parents IHT allowance can be used when the second parent dies, but only if the first parents estate has been left to the spouse, not children?

Its not a case of bundling the estates together, but adding the first IHT allowance to the second one, giving a total allowance of 650K.

From the money advise service website:

They can also pass on their unused tax-free allowance to their spouse. For example, if a husband dies and leaves his entire estate to his wife, his wife can take his allowance and add it to her own tax-free allowance. This combined allowance means that when she dies, her estate will only incur Inheritance Tax if it’s worth more than £650,000 (£325,000 + £325,000).

I may be wrong, and it may still apply in your case, but it doesnt sound like it from the piece above. Maybe give the probate helpline a call, they are v helpful.

kath6144 Thu 26-Jan-17 19:51:36

Actually, I think I may be wrong, and given that your mums estate was well below the 325k limit, you can still carry over the allowance:

This is from gov.uk IHT website:

If you’re married or in a civil partnership and your estate is worth less than £325,000, any unused threshold can be added to your partner’s threshold when you die. This means their threshold can be as much as £650,000.

Have a look at gov.uk website and maybe open up the short IHT form (even though you will need to fill in the full form)

There is a question there about spouse pre-deceasing and using their allowance too, but I cant actually remember how it was worded (I did mums last year but she was under 325 so wasn't applicable)

emmab250 Thu 26-Jan-17 20:13:16

Apart from the £30000 left to you and your brother, was everything else left to your dad?

In that case, your mum used up £30000 of her own IHT allowance (nil rate band) in her gift to you and your dad can use the rest of it. So the total allowance on your dad's estate is his own full nil rate band of £325000 plus your mums balance of £305000 which is £630000.

That's assuming they didn't make any gifts when they were alive or on death which may have used up part of their nil rate band.

emmab250 Thu 26-Jan-17 20:15:35

Sorry mistake in my figures there! Your mum had £295000 of her nil rate band left which your dad can use so he has £620000 in total

whataboutbob Thu 26-Jan-17 21:20:54

Kath6 can I have your second answer please?!!
Emma, rather embarrassingly mum left all her estate to her kids and none to Dad (he was quite hurt). Thanks so much for letting me know about the Govt's website Kath, sounds like a good resource, I'm off to check it.

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