IHT

[healthadvice123]

So much speculation about re IHT changes such as taxing mum and dad etc
can anyone explain in simple rules how this works
i.e property worth £450000 split between 2 children is inheritance tax due
property worth £200000 and £30000 in cash/ assets and person has gifted £20000 over last 5 years to various family is IHT tax due - will leaves house between 3 people and rest between 8 people
made up scenarios just to get an idea. Is the threshold per person or per estate and gifted money is this only of over a certain threshold

The threshold, £325,000 is for the net estate after debts and funeral expenses are cleared.

However there are concessions such as on second death of a married couple unused exemption from 1st death can be added. There are also special rules for houses/flats left to direct descendants.

I'd say it's an area where, in many if not most cases people need professional advice.

My Mother's estate was a wee bit bigger than you're example and with more investments and less tied up in real property. Solicitor cost £15k but saved us about twice that.

I don't believe either of those cases would have any IHT liability under the current rules.

In the first as the house is being left to direct descendants then in addition to the £325k allowance there is a £175k residential nil rate band that can be used.

In the second then the total value of the estate , including gifts made in the last 7 years, is under the £325k allowance.

There is a lot of unnecessary worry about IHT from people whose estates almost certainly aren't going to be liable to it.