IHT, Probate and HMRC Declaration
Discussion
All - am going round in circles with HRMC and conflicting guidance and need some pointers.
I am helping my dad (83 but still sharp as a tac) navigate probate for my mum who died recently. Summary is thus:
House owned jointly £750,000
Joint bank account £30,000
Mum has £100,000 in BS accounts in her name only (with her children as beneficiaries) and dad needs to apply for probate for this element.
To gain probate, dad has to estimate the value of the estate for IHT before probate is granted. I believe that the following is the correct way to value the estate: https://www.tax.service.gov.uk/inheritance-tax/est... and calculated below:
50% x £750,000 + 50% x £30,000 + £100,000 . This gives a total of £490,000 for mum's IHT declaration.
However, I thought that interspousal transfers for houses and joint bank accounts passed automatically and were then only subject to IHT on the death of the survivor (taking into account mum's allowance of £325,00 minus £100,000 being paid to children) and residence relief of £175,000, giving my dad a final IHT allowance of £900,000.
Are my assumptions and calculations correct?
Why does the taxman need to know about the house and joint bank account now?
Will these be included in my mum's IHT liabilities or are they just for HMRC reference at this point?
Obviously we want to get this right because #it'sthetaxman - hopefully someone can advise,
Martin
I am helping my dad (83 but still sharp as a tac) navigate probate for my mum who died recently. Summary is thus:
House owned jointly £750,000
Joint bank account £30,000
Mum has £100,000 in BS accounts in her name only (with her children as beneficiaries) and dad needs to apply for probate for this element.
To gain probate, dad has to estimate the value of the estate for IHT before probate is granted. I believe that the following is the correct way to value the estate: https://www.tax.service.gov.uk/inheritance-tax/est... and calculated below:
50% x £750,000 + 50% x £30,000 + £100,000 . This gives a total of £490,000 for mum's IHT declaration.
However, I thought that interspousal transfers for houses and joint bank accounts passed automatically and were then only subject to IHT on the death of the survivor (taking into account mum's allowance of £325,00 minus £100,000 being paid to children) and residence relief of £175,000, giving my dad a final IHT allowance of £900,000.
Are my assumptions and calculations correct?
Why does the taxman need to know about the house and joint bank account now?
Will these be included in my mum's IHT liabilities or are they just for HMRC reference at this point?
Obviously we want to get this right because #it'sthetaxman - hopefully someone can advise,
Martin
I'd agree with the above, a small amount spent on professional advice here will be worthwhile as the last thing you want is to find you've done it wrong, and owe something down the line. Just as one example, if they were married then the £100k in a bank account in her name may/may not be treated as £50k his, £50k hers. Putting money into an account in a sole name doesn't automatically prevent it being 50/50 split ownership for married couples as far as I remember.... again i'm not a professional but having been through two probates for my parents in quick succession, I was thankful for some professional advice. If you're concerned then get two opinions from professionals.
davidc1 said:
I sympathise, as i am also dealing with my dads financial situation.
Likewise here, tried the IHT205, for a few answers it said see the IHT400.The IHT400 and subforms (schedules) takes a bit of effort.
Not helped by a asset rich, cash poor estate, during a pandemic.
At least Mum has had two jabs. Best of Luck.
davepen said:
davidc1 said:
I sympathise, as i am also dealing with my dads financial situation.
Likewise here, tried the IHT205, for a few answers it said see the IHT400.The IHT400 and subforms (schedules) takes a bit of effort.
Not helped by a asset rich, cash poor estate, during a pandemic.
At least Mum has had two jabs. Best of Luck.
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