IHT on House left to children

[bruncher]

I thought I had read somewhere that a sole property bequeathed to spouse or children was totally exempt from IHT, but it seems I was wrong. All I can find on HMRC website is that the tax-free threshold of 325k is raised another 150k if a house is included in the estate, is that correct?

[Dod101]

A family home left to the next generation is certainly not IHT free. The allowance I think is £150,000 increasing next year. If it is left to a surviving spouse it is free of IHT like other assets.

Dod

[monabri]

My understanding of IHT
- If your parents jointly own a house, they each have an IHT threshold of £325k plus £150k. The latter figure should eventually increase to £175k....hence
a possible £1m allowance (£950k at the moment).
- So, Parent 1 (on death) can use their £475k and gift that to you - this might comprise their share of the house or other things (such as money)..
- Parent 2 (on death) can also use their £475k.
- If Parent 1 died after Oct 2007 and didn't use their full IHT allowance, then the unused percentage can be passed onto Parent 2.

So, when Parent 1 dies, you receive half the house in your name, and this would be reflected in the paperwork at Land Registry.

(It might be worth spending £100 and getting a definitive guide from a solicitor - professional advice)


From the definitive guide - .GOV website.

https://www.gov.uk/inheritance-tax/passing-on-home

You can pass a home to your husband, wife or civil partner when you die. There’s no Inheritance Tax to pay if you do this.

If you leave the home to another person in your will, it counts towards the value of the estate.

If you own your home (or a share in it) your tax-free threshold can increase to £475,000 if:

- you leave it to your children (including adopted, foster or stepchildren) or grandchildren
- your estate is worth less than £2 million

[PinkDalek]

- If Parent 1 died after Oct 2007 and didn't use their full IHT allowance, then the unused percentage can be passed onto Parent 2.

If I may, there's a similar topic over at Taxes viewtopic.php?f=49&t=17763 which may be of interest to the OP.

I don't understand your mention of 2007 though. From the other topic, the OP if applicable may wish to ensure the information and documents requested as below will be available to make the claim (the relief is not automatic):

Inheritance Tax: claim to transfer unused nil rate band (IHT402)
https://assets.publishing.service.gov.u ... IHT402.pdf

The various complications relating to first deaths before or after 22 March 1972 are outlined on page 4.

From the definitive guide - .GOV website.

https://www.gov.uk/inheritance-tax/passing-on-home

That is most definitely not definitive! Those pages are basic guides. The devil is in the detail, such as on the many pages here:

https://www.gov.uk/hmrc-internal-manual ... /ihtm46000

Edit: I see why you mentioned October 2007 now but that date (on or after 9 October 2007) relates to the second death. Earlier first deaths don't mean a Claim to transfer unused nil rate band is unavailable.

[krobaa]

If your estate is worth over £2m, the RNRB will be reduced by £1 for every £2 of value over £2m. This means that in this tax year (2017-2018) estates that are worth in excess of £2,200,000 will not benefit from the RNRB.

[PinkDalek]

If your estate is worth over £2m, the RNRB will be reduced by £1 for every £2 of value over £2m. This means that in this tax year (2017-2018) estates that are worth in excess of £2,200,000 will not benefit from the RNRB.

I think you must have got that extract from the internet. This tax year being 2019-2020, where the additional threshold is £150,000, the relevant amount is now £2,300,000.

There's a calculator here https://www.tax.service.gov.uk/calculat ... -threshold if of interest. I haven't checked it is current.