Can you help resolve this argument re IHT??

[gibbingibberish]

We are doing some planning.

Situation:

A couple have mirror wills.
House is valued about £1m.
House would be left to offspring, in the event of there being no care home fees.
Minus funeral costs, any debts etc

One party is insisting that IHT would be due in the event of both deaths, at 40% of everything over £1m and the other party says that it would be levied on anything over £750k.

Which is it please?

IHT on the house will be payable on the second death (assuming mirror will leaves to spouse first). What's the likely total value of the estate?

Are they married/in a civil partnership?

If the house is a primary residence and going to a child (or grandchild I believe) then it increases the joint exempt allowance for a married couple up to a million.

With no house (or not left to child or grandchild) then it’s an exemption of 325k per person or 750k for a married couple.

IHT due at 40% over those amounts.

Apologies if this has changed recently and is now incorrect. I don’t think it has though!

inheritance Tax will be paid on anything above £500k on a house inherited by children.https://www.gov.uk/inheritance-tax/passing-on-home

That’s correct apart from 2 x £325k is £650k

Oh dear god can’t even do basic maths anymore! School holidays need to be over…

It’s per parent though - so £1m total.

Wrong.

You also inherit the spouse allowance meaning it’s £750k

There is NO IHT on first death if all assets pass to the spouse. You MUST be married. If not then tax is due on anything over £325k - no RNRB applies.

Second death and transition to kids it’s BOTH parties allowances and therefore £1m again ONLY if married of CP

Nil rate band pp is £325k, residence nil rate band is £175k, so a single person leaving residence to DC gets £500k allowance. If married/civil partnership, surviving spouse gets deceased spouse’s £500k allowance, so no IHT calculated until second death, when there is a £1million allowance available.

this is the only argument in favour of marriage/CP in the case of older cohabiting couples 😂

Thanks, as I thought.

Couple are married. House is left to the children.

Assuming no gifts have been made by either of the couple within the past 7 years that might have used up any of their respective Nil Rate Bands?

advice on this thread starts at £500 and then £750 to £1 million from different posters

Write a will with a decent solicitor and they will give you this advice. The value of the house might change between now and when the people die, and that will then vary the IHT. Also the rules might change.

When my mother died the rules where different for IHT from when my father died over 2 decades later. The value of the house had also changed - and he had moved homes

As I understood it

Its 2x £325 for each married parent and then £150 for the property, making £800

You are understanding it wrong

I was clearly having a ‘moment’ as no idea where £750k came from 🙄it is £1m to the children of a married couple.

The 1m is right as 2 lots of normal nil rate band of 325 then if house to children 2 lots of 175 residence nil rate band. However will the total estate go over the 2 m as if it does the residence nil rate band is tapered down. Tax accountant here