Inheritance Tax

[skeemee]

My dad died approx 15 years ago, leaving everything to mum. Not a large estate, £150k joint assets including their house. It went through probate (I had no involvement). Mum since moved house, current property worth £325k.

Mum is 87 and recently had a few falls and pneumonia resulting in short stay in hospital. She is wanting to make some cash gifts to her GC so she can see them enjoying their inheritance before she dies. I have been trying to get her to spend her money for years (on herself, nice holidays etc), but she has been a bit miserly and kept salting her cash away.

I’m worried that she will now fall foul of making gifts over £3000 per year, as she has 10 GC, so potentially £10k gifts this year. I wish she had spread these gifts out over the years, but she’s known for her thrifty ways.

Obviously, we have no idea how long she may live. Hopefully til she’s 100 at least.

Anyway, are there any “allowances” because my dad has already died? Her children are being left the house (assuming no care home comes into play). Does this mean the IHT threshold is increased to £500k?

She won’t pay for her will to be updated, as she says nothing has changed, and it’s still the same mirror will she had with my dad. Not sure if that is true?

Any advice re making gifts or anything else we should be thinking about?

It will be £1m, as she will have your dads allowance too.

So defending on the size of the estate, she might be fine.

*depending, not defending.

But yeah, as your dad left everything to your mum, there is 100% of his allowance remaining for your mum to use.

So two full allowances is a total of £1m, including the house, as long as the house is left to direct descendants (which is sounds as though it will be).

did your dad leave anything to anyone else but your mum?

if he didn't then you children would get his £325k allowance , ontop of your mums £325 allowance and then if there is still a property another £150

so there wouldn't be inheritance tax to pay

so any gifts given whilst your mum Is alive wouldn't in that instance be liable for IHT unless the amount is over the threshold which could well be over £700k

Don’t think the late father will get the new allowance as he died before it came in. He will have the original £325 k allowance she will have the full £500k though so as long as her estate is beneath £825k at her death she shouldn’t have to pay IHT and if it was she would pay 40% of the portion above £825k

I believe that you can use the current year's £3000 tax free allowance on gifts, plus the previous year's if you didn't give away any gifts in that year.

So she can give away £6000 this year tax free.

Thanks all. I doubt it would be more than £600k for everything. So she can gift away to her hearts content then? It’s not going to be fortunes, maybe £1000 here or there (which is a fortune to her).

No, my dads full estate passed to mum. Everything was joint.

Don’t think the late father will get the new allowance as he died before it came in.

yes she can, I did it last year from 1977

Small gifts allowance (upto £250 pp) might be helpful, alps regular gifts out of income www.gov.uk/inheritance-tax/gifts

She can use the last years allowance as well so can gift £6000.

No you’re quite right even pre 2017 deaths get the new allowance

Thanks all. Much appreciated 😊

just a word of warning with an old will... when my relative died with an old will the executor had pre deceased her by about 10 years - so that made life difficult at a distressing time. Get your mum to check the will is actually up to date with regard stuff like that