Inheritance tax

[HawkEye244]

Hey all,
I was reading about inheritance tax and I notice there is a relatively new tax allowance brought in under George Osborne and it is if you leave your home to a spouse or child and can increase the inheritance tax allowance to 500k as of next tax year? Currently it is 475k with this extra allowance. The base rate for inheritance tax is currently 325k.
So if I died today my kid would get 475k ? Is it as straightforward as that?
I'm curious to know because there is lots of info about inheritance tax itself but not about this extra allowance. Here it is on the .gov website:

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

Thanks for any info..

 

[conny]

Passing on a 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

Looks straightforward to me. I'd keep a copy of this and, if needs be, put a copy with your will/solicitor.

 

[Mottie]

your estate is worth less than £2 million

Aw sod it. I'm over the limit.

 

[conny]

Aw sod it. I'm over the limit.

In your dreams.

 

[Bosswhite]

Passing on a 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

Looks straightforward to me. I'd keep a copy of this and, if needs be, put a copy with your will/solicitor.

Isnt there a limit if you leave your property to your children One has to pass the property over to the children seven years before death to get out of IHT

 

[JohnD]

If you carry on living in it, it's a gift with reservation, and IHT is not avoided*


*there is a bit more to it, but people often, wrongly, think they can dodge tax.

If your children dislike you, get divorced or go bankrupt, the house might be sold.

 

[conny]

Isnt there a limit if you leave your property to your children One has to pass the property over to the children seven years before death to get out of IHT

Not according to the link HawkEye posted from the government website which I quoted by C&P.

It says the limit before IHT comes into force increases to £475, 000 if you leave it to a child.
Obviously if your estate is worth more than £475k then there will be IHT to pay but there is nothing about the 7 year rule mentioned.

 

[Mottie]

Dunno if this applies to this thread but to protect some of the value of our home from care home fees when there’s only one of us left, we have made ourselves tenants in common instead of joint tenants. So, when the first of us die, our 50% share of the property will pass to the kids. Should the remaining one of us die without going into care, they get the other 50%. Should the remaining one of us go in a home, only 50% of the house value can be claimed. Whether this affects IHT I’m not sure.

 

[JohnD]

Not if the widow continues living in the house*


*see above.

 

[HawkEye244]

Not according to the link HawkEye posted from the government website which I quoted by C&P.

It says the limit before IHT comes into force increases to £475, 000 if you leave it to a child.
Obviously if your estate is worth more than £475k then there will be IHT to pay but there is nothing about the 7 year rule mentioned.

Correct, yes. I phoned to find out and the 7 year rule only applies if you are trying to avoid the tax by signing over your property.
So it is a tax allowance of £325,000 for the normal nill rate inheritance tax + £175,000 allowance on passing on a property you own and live in, making a total of £500,000 tax allowance you can pass on before tax is due. At the moment it's £150,000 and has been going up in increments of £25,000 each tax year for the past few years.

 

[HawkEye244]

If you carry on living in it, it's a gift with reservation, and IHT is not avoided*


*there is a bit more to it, but people often, wrongly, think they can dodge tax.

If your children dislike you, get divorced or go bankrupt, the house might be sold.

That applies if you give your home away BEFORE you die.
Just to be clear.

 

[festive]

Not paying a single fking penny after I die that I guarantee. Why should you pay tax on your amassed assets of life taxed earnings and daily taxed to death life to be taxed on death...really?.

Really who the fck do they think they are why do we accept this?

 

[JohnD]

That applies if you give your home away BEFORE you die.
Just to be clear.

And also if you leave your half of your house to your children or someone, but your widow continues living in it. Both halves will be part of her estate for inheritance tax calculation.

Just to be clear.

But she will also inherit any unused part of your IHT allowance.

So will be hit if house prices have risen faster than IHT allowances.

 

[Mottie]

And also if you leave your half of your house to your children or someone, but your widow continues living in it. Both halves will be part of her estate for inheritance tax calculation.

No, she can just live in her half. The Children can live in their half.

 

[IT Minion]

Not paying a single fking penny after I die that I guarantee. Why should you pay tax on your amassed assets of life taxed earnings and daily taxed to death life to be taxed on death...really?.

Really who the fck do they think they are why do we accept this?

Well no, it'll be your estate that pays. You won't have any money, you'll be dead. They will figuratively be taking the money from your cold dead hands.

But most people on here wont be affected by IHT, only about 5% of deaths according to the tax man.

Why do we tolerate it? It brings in about 5 Billion a year. Just because it's how we quote things thats about the same as our net contribution to the EU. That's a lot of money that we'd have to cut or find another way to raise.