inheritance tax

[kaylasmum]

just wondering if anyone can explain anything about this. My partners mum died in april, her estate has been valued and is around 400k. The house is valued at 280k and the rest is from insurance and bonds. My partners brother is living in the house and probably will be for the foreseeable future. Just wondering how much will be due for inheritance tax and how it has to be paid. We are on a low income so obviously this is concerning us. Are we liable to pay anything?

TIA for any advice.

The threshhold is £325k, so you'll probably need to look into it. I'm not an expert though so hopefully someone will be along soon who knows more.

Oh also, was she married? If her husband died before her, then (I think) that she should have his 325k added onto hers, leaving a threshhold of 650k (which might mean no problems for you).

I really don't know much about it, but was talking to someone about my will yesterday, so it's all fresh in my mind .

IHT threshold is £325k at the moment, so there would be duty to pay assuming she wasn't married and left it to a surviving spouse. It isn't a straightforward matter though so you are probably best letting a solicitor handle it and advise. Normally it is payable before any legacies are paid out rather than from the beneficiaries' income. Presumably you are having to get probate . Will you sell the house ? Info here

If the will says it should be split between your partner and his brother, then the house will need to be sold surely unless he can give you cash to the equivalent value?

I would speak to the solicitor who is dealing with the estate.

there is a useful link here www.hmrc.gov.uk/inheritancetax/

Normally the executer deals with the tax. Currently you pay 40% of everything over 325k, so based on what you've said, about 30K would be due on an estate of 400k. This is usually taken out of any cash assets in the estate before bequests are made, although exactly how it affects the other bequests will depend how they are worded in the will.

As Midnight says, if she had a husband then you might be able to use his allowance as well, assuming he hasn't already used it (or part of it).

Should stress though I am not an expert - this is only what I've picked up from dealing with my mum's estate.

In theory though, it sounds like there are plenty of assets to cover the tax aside from the house, so it doesn't sound like it would be a problem that the house can't be sold immediately.

The only other possible complication is that I think there might be capital gains tax to be paid on any increase in the value of the house in the interval between the estate being valued for inheritance tax and the house actually being sold. You might want to contact a solicitor about this to establish who would pay the CGT in the event of this happening.

thanks for your replies, we know nothing about any of this. In the will she stated that my partners brother should be able to stay in the house rent free, he was living with her and looking after her when her health deteriorated. Not sure if he has any plans to sell the house or not. Also her husband died about 9 years ago and he left money, not sure if any inheritance tax was paid then or not.

That sounds rather complicated and may be hard to manage. There will almost certainly be some cgt issues as well if the property is registered as joint owned by dp and his brother and sold later on.

You can pay inheritance tax in installments over 10 years, I seem to remember. His living there won't stop any IHT being due, I don't think.

I don't know if it makes any difference but we are in scotland. Whats a cgt? As far as i know the house is'nt registered im my dp or brothers name. There is a solicitor handling it and he'd advised against selling the house in the next few years. Not really to sure why that was.

CGT = Capital Gains Tax. The house will still be in your MIL's name I assume? Being in Scotland will probably make a difference. You need to speak to a solicitor really.

Scotland may differ but in England if you are resident in a house as your principal private residence for a time (used to be 3 years) then you can claim some exemption from cgt. Each person also has an annual allowance which can accumulate to offset against the rise in property value thus reducing liability to pay cgt.