We are not a couple. We are a father and a child. Should we have an Inheritance Will where it is stated exactly that if he passes away I will inherit fully the house, any savings in his bank account and all home contents?
Please explain further how the 40 percent rule applies for estates over 1 million Uk pounds , so if the estate is 1.2 million is it the £200,000 would it be at 40percent this means £80,000 would be taken by HMRC ? Please clarify as this video doesn’t fully explain to me the over 1million threshold..
Yes, if an estate was worth £1.2million and has two Nil Rate Bands (NRB) and Residential Nil Rate Bands (RNRB) available (essentially the second death of a married couple) then £1m could pass to the next generation with no IHT. The excess of £200,000 would be taxed at 40%, therefore the tax bill would be £80,000. Hope this helps!
how would it work if for example one of the parents passes away and has assets worth upto 1 million pounds however does not leave a will. Does the spouse still inherate everything and do they need to pay IHT?
If someone doesn't have a Will the rules of intestacy apply. In your example if we assume the couple are married with children, the following will apply: If the estate is valued at less than £322,000 then the partner would inherit 100%. If the estate is valued at more than £322,000 then the partner would inherit the first £322,000 and half of the remaining estate. The children would inherit the other half of the remaining estate. Lots of people don't realise this and therefore may not realise how important it is to have a Will in place. There is no immediate IHT to pay on the transfer of assets to a spouse, but depending on the size of the value left to children there could be some IHT payable. Hope this helps!
@WealthofAdvice thank you for your help, the estate is worth around 1million and we are happy for our mother to inherate all of it. they were married for over 50 years and were still together when he passed. does this mean she would not have to pay IHT?
@@MrAlam87 Whilst the rules of intestacy are quite rigid, you can use a Deed of Variation (a legal document) to change how the estate is divided up. It would make sense to get legal advice to ensure that this is done correctly. If 100% of assets are transferred to your Mother, there will be no immediate IHT to pay. However, given the size of the assets and the potential for IHT to be payable on second death, it would make sense to consider if your Mother will need some IHT planning to ensure that she can pass assets on tax efficiently. If this is useful either now or in the future, please feel free to get in touch: msinclair@wealthofadvice.co.uk
Is there any way around paying the IHT for an unmarried couple and their descendant on second death? seems very unfair the exemption is only for married/civil partnership couples, is marriage the only way to avoid it if the estate is over the NRB?
Thank you for the comment. Simple answer is that marriage is the only way to benefit from the inherited Nil Rate Band. An alternative approach would be to make lifetime gifts, to bring the value of the estate down. It will be interesting to see if the upcoming budget changes any of the current rules in this area!
I am non-resident in the UK, but have investments there. Both my parents were British, so considered UK domiciled by origin..Will my estate be liable to UK inheritance tax, and would that be on worldwide assets?
Thank you for your comment - this is an interesting question! Domicile is a complicated process, which isn’t as simple as domiciled by origin. Essentially, domicile should be where you intend to die or expect your estate to be administered. Given your situation, we would suggest seeking legal advice to help you confirm you own position. Hopefully this is helpful!
With IHT Is there an order you must apply the additional residential nil rate on married couples being £350k first? Then 650k allowance! Basically my question is as long as the house is over £350k then your do not pay 40% upto assets of £1million?
Hi Steve Thank you for the question. In your scenario on second death in order to benefit from two full Residential Nil Rate Bands (£175,000 per person), a property worth in excess of £350,000 would need to be left to a direct descendent. If this is the case, the overall amount available to pass on without an Inheritance Tax Charge would be £1 million for the couple. There are other considerations such as if an estate is worth more than £2 million then the residential nil rate band is reduced by £1 for every £2 in excess. If you have assets in excess of £1 million, it can be certainly be beneficial to talk to a financial planner. Please feel free to get in touch, if you would like more information.
is this correct, a married couple 1 passes leaves everything to the partner (way less then 1 million) so no IHT, then the 2nd passes leaving everything divided 50/50 between 2 children with total less then 1 million, then there would be no IHT to pay also ??? do i have this correct ?
Hi Tony You are correct - in the simplest terms a married couple can leave £1m to the next generation with no IHT to pay. There does need to be a property involved to qualify for the Residential Nil Rate Band and this increases the figure from £650k to £1m that can be left. Hope this helps!
We are not a couple. We are a father and a child. Should we have an Inheritance Will where it is stated exactly that if he passes away I will inherit fully the house, any savings in his bank account and all home contents?
Please explain further how the 40 percent rule applies for estates over 1 million Uk pounds , so if the estate is 1.2 million is it the £200,000 would it be at 40percent this means £80,000 would be taken by HMRC ? Please clarify as this video doesn’t fully explain to me the over 1million threshold..
Yes, if an estate was worth £1.2million and has two Nil Rate Bands (NRB) and Residential Nil Rate Bands (RNRB) available (essentially the second death of a married couple) then £1m could pass to the next generation with no IHT. The excess of £200,000 would be taxed at 40%, therefore the tax bill would be £80,000.
Hope this helps!
how would it work if for example one of the parents passes away and has assets worth upto 1 million pounds however does not leave a will. Does the spouse still inherate everything and do they need to pay IHT?
If someone doesn't have a Will the rules of intestacy apply. In your example if we assume the couple are married with children, the following will apply:
If the estate is valued at less than £322,000 then the partner would inherit 100%.
If the estate is valued at more than £322,000 then the partner would inherit the first £322,000 and half of the remaining estate. The children would inherit the other half of the remaining estate.
Lots of people don't realise this and therefore may not realise how important it is to have a Will in place.
There is no immediate IHT to pay on the transfer of assets to a spouse, but depending on the size of the value left to children there could be some IHT payable.
Hope this helps!
@WealthofAdvice thank you for your help, the estate is worth around 1million and we are happy for our mother to inherate all of it. they were married for over 50 years and were still together when he passed. does this mean she would not have to pay IHT?
@@MrAlam87 Whilst the rules of intestacy are quite rigid, you can use a Deed of Variation (a legal document) to change how the estate is divided up.
It would make sense to get legal advice to ensure that this is done correctly.
If 100% of assets are transferred to your Mother, there will be no immediate IHT to pay. However, given the size of the assets and the potential for IHT to be payable on second death, it would make sense to consider if your Mother will need some IHT planning to ensure that she can pass assets on tax efficiently. If this is useful either now or in the future, please feel free to get in touch: msinclair@wealthofadvice.co.uk
@WealthofAdvice thank you soo much for your help!
Is there any way around paying the IHT for an unmarried couple and their descendant on second death? seems very unfair the exemption is only for married/civil partnership couples, is marriage the only way to avoid it if the estate is over the NRB?
Thank you for the comment.
Simple answer is that marriage is the only way to benefit from the inherited Nil Rate Band.
An alternative approach would be to make lifetime gifts, to bring the value of the estate down.
It will be interesting to see if the upcoming budget changes any of the current rules in this area!
I am non-resident in the UK, but have investments there. Both my parents were British, so considered UK domiciled by origin..Will my estate be liable to UK inheritance tax, and would that be on worldwide assets?
Thank you for your comment - this is an interesting question!
Domicile is a complicated process, which isn’t as simple as domiciled by origin. Essentially, domicile should be where you intend to die or expect your estate to be administered.
Given your situation, we would suggest seeking legal advice to help you confirm you own position.
Hopefully this is helpful!
With IHT Is there an order you must apply the additional residential nil rate on married couples being £350k first? Then 650k allowance!
Basically my question is as long as the house is over £350k then your do not pay 40% upto assets of £1million?
Hi Steve
Thank you for the question.
In your scenario on second death in order to benefit from two full Residential Nil Rate Bands (£175,000 per person), a property worth in excess of £350,000 would need to be left to a direct descendent. If this is the case, the overall amount available to pass on without an Inheritance Tax Charge would be £1 million for the couple.
There are other considerations such as if an estate is worth more than £2 million then the residential nil rate band is reduced by £1 for every £2 in excess.
If you have assets in excess of £1 million, it can be certainly be beneficial to talk to a financial planner.
Please feel free to get in touch, if you would like more information.
is this correct, a married couple 1 passes leaves everything to the partner (way less then 1 million) so no IHT, then the 2nd passes leaving everything divided 50/50 between 2 children with total less then 1 million, then there would be no IHT to pay also ??? do i have this correct ?
Hi Tony
You are correct - in the simplest terms a married couple can leave £1m to the next generation with no IHT to pay.
There does need to be a property involved to qualify for the Residential Nil Rate Band and this increases the figure from £650k to £1m that can be left.
Hope this helps!