inheritance tax if not married. anyone help?

[Ahole]

Hello, does anyone know about inheritance tax?

My dp and i are not married. We have a house with a mortgage which is in both our names. Both names on mortgage and deed.

If one of us died would the other one automatically inherit the other half and would the surviving one need to pay inheritance tax on the other half?

My dhs work would also pay out a certain amount. Would some of that need to be paid as inheritance tax as well? And life insurance?

Do you own as joint tenants or tenants in common? I think if it is the former, the survivor automatically owns the entire property without it becoming part of the estate, but in the latter case, the portion owned by the deceased person is separate and becomes part of the estate, and so liable for inheritance tax (if the entire estate is over the threshold for tax, which is currently £325k).

At least, that is my understanding, but I am sure someone more expert will coming along soon.

This article explains join/in common tenants quite well

Ok I'll have to check. Where would i find out that information? I would imagine it is joint tenants as i can't imagine the bank giving a mortgage on it otherwise?

That article has fried my brain! It sounds as though there are benefits to both?

When I bought my first house the solicitor sorted it out for us (joint tenants) along with a will, so you might find it on the paperwork. At the time I think joint tenants was the default anyway.

I remember the solicitor when we bought our first place (currently on the second) asking if we wanted everything 50 50, but we didn't do a will. Still don't have one.

As far as I understand it this is the case. Each person has an allowance of just over £300,000 which can be left free of inheritance tax.

When people are married or in a civil partnership this portion can be passed on to the surviving partner. But I read about the case of two sisters who owned a house worth say £800,000 between them. So one half is worth £400K therefore inheritance tax would need to be paid. And the same goes for other partnerships.

However I am not a legal expert and this was a few years ago. Maybe the law has changed since then. I'd seek legal advice.

With Inheritance Tax, each of you has an allowance of £325k that can be left free of IHT. Anything above that would be charged at 40% (but IHT attributable to a house could be paid in ten annual instalments). You would only be assessed on the equity in your share of the home, after deducting your share of the outstanding mortgage.

If you were married, you could leave an unlimited amount to your surviving spouse free of IHT.

Death in service benefit and life insurance almost always fall outwith the scope of IHT. The funds would be paid to a trust instead of to your deceased DH. The trustees would then distribute the funds to you / your children / otherwise in accordance with your husband's wishes. He should have made a nomination to cover this.

As noted above - check whether you hold title to your home as joint tenants or tenants in common. If the former, you would automatically inherit your husband's half share of the home.

You should absolutely have a will to cover the remainder of your assets.

"As noted above - check whether you hold title to your home as joint tenants or tenants in common. If the former, you would automatically inherit your husband's half share of the home."

You would automatically inherit under joint tenants but you would still have to pay any IHT if your DH's estate is large enough. See www.hmrc.gov.uk/inheritancetax/paying-iht/who-pays.htm

"My dhs work would also pay out a certain amount. Would some of that need to be paid as inheritance tax as well?"

IHT is not due it - it never forms part of his estate, it will go to you directly

" And life insurance?"

IHT will not be due on this provided that it has been "written in trust". This is the usualy way of setting up life assurance, but you should check this has been done.

(I never make any money from any of the links in my posts.)