Inheritance tax Question

[Findmeintheshed]

I'm in such a muddle and I can't think straight, so anyone who's brain does work able to help me?

My elderly DDad died 2 weeks ago, he was in hospital awaiting an op and it was his time.
His house (the family home) is now up for sale for £650k, I'm not sure we'll get that with the market being what it is, but it's a ballpark figure.

My DM died 3 years ago. She owned shares and property (as well as half the family home which passed directed to my DDad, they lived there together since us children flew the nest and they were married 45 years).
She left an estate of about £400k (not including the family home) directly to her children (of which I am one) and as it was over the £325k nil rate threshold we paid IHT on the rest.

Now my DDad has died I'm not sure what IHT we will need to pay.

I am not a executor of his will, my DSis & DB are and they aren't in a hurry to get things sorted.
I however would love to know so I can plan my future as I was hoping to send my DD to private school as she is struggling in her state school and I think would benefit from smaller class sizes etc.

Is it the £325k or is this nil band larger because it was the family home? (he has no other money or assets at all) I've been reading online, but my brain is fried and I don't understand it?!?

Sorry for your loss. As I understand it, your mother's passing and estate is irrelevant to the current situation. IT is payable on any surplus estate (i.e. after debts, tax, funeral costs etc are paid) over £325,000.

If the deceased gifted the property to their children (including adopted ) or grandchildren the threshold rises to £500,000 if the total value of the estate is less than £2 million.

As I'm just a random person on the internet, I'd strongly advise you to speak to a professional who is fully au fait with IT.

Mother has used up her nil rate band so there is no NRB transferable. However her residential nil rate band has not been used and is available to transfer.

So father's estate has NRB of £325k plus RNRB of £175k plus Tranferable RNRB of £175k (providing that the house is left to direct dependents and has a value over £350k)

so IHT is payable on anything over £675k.

That sounds right to me too as nosalt says because of the relatively new leaving a house to children rules.
I just found this summary which looks quite helpful

"Main residence nil-rate band

There is also an additional rule called the ‘main residence nil-rate band’. This provides an extra tax-free allowance of £175,000 on top of the £325,000 nil-rate band, provided that the house is being left to a direct descendent such as child, step-child, foster child, adopted child or grandchild. It does not apply if you want to leave the house to friends, nieces or nephews. If your total assets are worth more than £2m, this additional allowance will gradually decrease by £1 for every £2 over the threshold.

Taking the ‘nil rate band’ and
‘main residence nil-rate band’ together means that you have potentially £500,000 of property you can leave to your child tax-free. This can increase further as each of these allowances is per person, meaning that spouses or civil partners could potentially leave £1,000,000 of property on the death of the survivor of them to their children tax-free if the criteria is met.

The ‘main residence nil-rate band’ cannot be used with lifetime gifts."

With such a large estate and complicated, I'd ask a probate solicitor to deal with it as IH has to be paid on a proportion. The fees come out of the estate so you will,have no financial penalties

The estate looks uncomplicated and on the face of things there should be no IHT to pay (if estate is less than £675k).

The executors however will require to submit form IHT 400 to HMRC to claim RNRB and TRNRB before probate.

Im surprised the house is already up for sale as probate will be required before exchange and completion.

We were planning that as my Dad would be moving into respite care following his op that he would transfer to a nursing/care home after that as we didn't think he could cope with going home.
He also has no money to pay for care, so the home needed to be sold to pay for the care home so was already on the market before he died.

Thank you @nosalt ! That is the clearest explanation I've read that I can actually understand. I couldn't work out how I'd read on the one hand there is a £325 nil rate allowance, but also you could leave £1million tax free too finally makes sense to me and hopefully we can avoid solicitors (they added so much to the stress following my late mothers death).

So sorry about your Dad.

If they are able it would be good if your DB and DSis could get on with probate as it will be harder to get a good offer without it. People don’t like the uncertainty of waiting.

I hope all goes smoothly.