IHT - any tax experts out there?

[sensitivesarah]

Our last surviving parent died in July.

Their house was left to us offspring, we've not sold it yet, it's on the market.

Hypothetically, if the budget in October confirmed IHT increase - will we be exempt as the parent died in July?

Or as we have not yet sold the property, and it is likely to clear after October, will be pay new rates?

In short, does the new IHT tax rate consider time of death or time of sale.

If you’ve got probate the IHT process is complete. And you can’t sell the house before probate’s granted. If you’ve managed to get probate in less than two months I’m astonished. It took at least three months on both my parents’ estates and that was long before the current backlog.

I didn't want to make it a long and wordy question, so made it simple as possible.

On the market/due to go on the market. I didn't think it made a tonne of difference. Sounds like if does.

Are you saying if new IHT rules will come into play in October and if probate has not been completed then new IHT taxes will be paid, despite the parent passing in July?

So you haven’t got probate yet? I imagine if new IHT rates are introduced there will be a cut off date and any estate probated after that date will be subject to the new rate. There might be exemptions for estates already in the system on that date. Anyway, it’s the date probate’s granted that’s crucial because you can’t sell the house before that.

It's a constitutional principle that tax should never be charged retrospectively- the underlying principle being that citizens should have certainty as to their tax position under the law.

So the rates and thresholds for IHT purposes are the ones in force at the date of death.

Rate and allowance changes normally don't take effect in the middle of a tax year (ie when announced) but from the beginning of the next one, so 6 April 2025, though there can be exceptions for taxes such as VAT and stamp duty.

No-one knows until the budget. Whatever happens, there's still likely to be a generous nil rate band and increasing taxes on inheritance is addressing inconsistencies on how assets and gains are taxed compared with income.

Don't forget that many people have lost their parents and don't stand to be made wealthy due to inheriting their assets. From the point of view of those people, it's in really bad taste to be asking these sort of questions.

@Bjorkdidit who said I was going to be made wealthy?

You don't have the facts, so you cannot possibly tell me I'm posting in 'really bad taste'.

It's a forum, I can ask for guidance from those who know more than me.

If you're worrying about paying IHT, by definition, it involves large sums of money, ie wealth. Why shouldn't it be taxed?

Totally unnecessary response and frankly astonishing rude. The OP simply asked for some facts about IHT. You'd be wise to bow out of this thread.

@Bjorkdidit I didn't say it shouldn't be taxed. I'm asking if I should expect to pay the new rates because the probate hasn't gone through or if it will be for those who pass after the new budget announced.

Yes the property is worth more than £500k so we will pay tax on the final £100k.

Did you know;

• I'm one of 6 people it's been left to
• We have family debt to pay off from the fee
• That we have to support a family member who is in debt so was not written into the will but needs support, including their rent/living costs

You don't know the facts. I'm not set to become wealthy but I would like to know if the remaining £100k, will be taxed at 40% or more.

Not that I need to explain myself to you.

FFS the poster is asking the question on the politics board, not the bereavement board. Your response is ridiculous.

The tax point for IHT on death has nothing to do with the probate process. The date of death will be the IHT tax point. As @liz4change says the thresholds and exemptions available on the date of your parent’s death will be the ones available when filling in the IHT forms (or confirming if it’s an exempt estate). I am sorry for your loss.

Were your parents married and if so did the first spouse to die leave everything to the surviving spouse? If so then depending on the value of the rest of the estate you may have no IHT on a £600k property if total estate is less than £1m as you can transfer unused nil rate bands between spouses.

It's not in bad taste. The op is asking practical question.

Seriously, how is that even your thought process?

Sadly not. They were divorced and my other parent had nothing and passed long before.

Sorry for your loss. Can confirm rules in force from date of death are what are used, IHT threshold increased between my df dying and grant of probate but we were bound by the lower threshold and so had to pay IHT above that amount.

Thank you for the insight @liz4change @BadgerFace

My pleasure, I often see incorrect tax advice on these boards which is not helpful for people asking very reasonable questions, especially in a time of grief. And kindness costs nothing!