IHT for couples


R

Roger Mills

So Mr Darling has increased the IHT threshold for married and civil
partnership couples to £600k.

Has anyone seen the nuts and bolts of how this will work in practice? Being
a cynic, my first thoughts were that he was probably not giving *anything*
away. Since most couples don't die simulaneously, when the second one dies
her or she is *single* and - I suspected - only entitled to a single £300k
allowance.

But then I saw something about it being backdated for existing widows and
widowers - so maybe it *is* genuine? But will it be £600k regardless of how
the assets were owned, or only £600k if the assets were owned in equal
measure prior to the first death?

For example, a woman dies leaving £100k which passes to her husband. He has
£500k of his own, and subsequently dies leaving a total of £600k. Is that
*all* exempt from IHT, or only £300k of his £500k plus the £100k he
inherited from his wife?
--
Cheers,
Roger
______
Email address maintained for newsgroup use only, and not regularly
monitored..
Messages sent to it may not be read for several weeks. PLEASE REPLY TO
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D

Derek Geldard

So Mr Darling has increased the IHT threshold for married and civil
partnership couples to £600k.

Has anyone seen the nuts and bolts of how this will work in practice? Being
a cynic, my first thoughts were that he was probably not giving *anything*
away. Since most couples don't die simulaneously, when the second one dies
her or she is *single* and - I suspected - only entitled to a single £300k
allowance.

But then I saw something about it being backdated for existing widows and
widowers - so maybe it *is* genuine? But will it be £600k regardless of how
the assets were owned, or only £600k if the assets were owned in equal
measure prior to the first death?
It's a trick of spin intended to enable him to publish a headline
figure of £600k (Nay £700k), to counter the Tories proposal to up the
threshold pure and simple to £1,000,000 per individual, when very
little has actually changed.
For example, a woman dies leaving £100k which passes to her husband. He has
£500k of his own, and subsequently dies leaving a total of £600k. Is that
*all* exempt from IHT, or only £300k of his £500k plus the £100k he
inherited from his wife?
As I read it at the first death the woman "used" £100k of her £300k
allowances. Hubby can now use the unused £200k of allowances, so he
now has £500k of allowances and his estate pays tax on £100k of
inheritance.

However they could without the benefit of today's pronouncements have
achieved better than that, depending what form their assets took just
by organising their affairs in such a way as to achieve that
objective.

The document is here :

http://news.bbc.co.uk/1/shared/bsp/hi/pdfs/09_10_07_pbr_report.pdf

DG
 
T

Terry Harper

As I read it at the first death the woman "used" £100k of her £300k
allowances. Hubby can now use the unused £200k of allowances, so he
now has £500k of allowances and his estate pays tax on £100k of
inheritance.

However they could without the benefit of today's pronouncements have
achieved better than that, depending what form their assets took just
by organising their affairs in such a way as to achieve that
objective.

The document is here :

http://news.bbc.co.uk/1/shared/bsp/hi/pdfs/09_10_07_pbr_report.pdf
The definitive document is PBRN16 which is on the HMRC web site under
notes on the Pre-Budget Statement. See
http://www.hmrc.gov.uk/pbr2007/notes-pdf.htm for the whole list of
documents.
 
J

Jeff Allen

Terry said:
The definitive document is PBRN16 which is on the HMRC web site under
notes on the Pre-Budget Statement. See
http://www.hmrc.gov.uk/pbr2007/notes-pdf.htm for the whole list of
documents.
In the case of property would it need to be spilt up so it's held as
tenants in common in order to take advantage of this? Or do these new
rules also apply to property held as joint tenants?
 
J

Jonathan Bryce

Jeff said:
In the case of property would it need to be spilt up so it's held as
tenants in common in order to take advantage of this? Or do these new
rules also apply to property held as joint tenants?
With the new rules it doesn't matter how the property is owned.

Previously, you would have had to give half the property to the children on
first death and half on second death, and get round the gift with
reservation and pre-owned assets rules.
 
J

John Boyle

Jeff Allen said:
In the case of property would it need to be spilt up so it's held as
tenants in common in order to take advantage of this? Or do these new
rules also apply to property held as joint tenants?
#
Yes, I ask that question as well. On first sight it would appear the
first to die would still need to have personal assets sufficient to
fulfil their nil rate band in order not to utilise it. Lets wait and see
the small print and the Tax Specialists' opinions.
 
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J

John Boyle

Jonathan said:
With the new rules it doesn't matter how the property is owned.
Thanks. I havent found that bit yet. Can you point me?
 
T

Toom Tabard

On Tue, 9 Oct 2007 19:21:56 +0100, "Roger Mills"


As I read it at the first death the woman "used" £100k of her £300k
allowances. Hubby can now use the unused £200k of allowances, so he
now has £500k of allowances and his estate pays tax on £100k of
inheritance.
As I read it from the hmrc website, If the woman's whole estate is
£100K and that passes to her husband, then, since transfers between
spouses are free of inheritance tax, it uses up none of her nil-rate
band, so the whole allowance passes to the husband. His nil-rate band
is then the full £600,000

Toom
 
J

John Boyle

Toom said:
As I read it from the hmrc website, If the woman's whole estate is
£100K and that passes to her husband, then, since transfers between
spouses are free of inheritance tax, it uses up none of her nil-rate
band, so the whole allowance passes to the husband. His nil-rate band
is then the full £600,000
Yes, similarly, what happens to jointly owned assets. The initial info
that has been published is not clear at all.
 
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R

Ronald Raygun

Tim said:
What happens if the surviving spouse subsequently
marries again -- do they lose the unused IHT
allowance from their first husband/wife?
No, serial widows can accumulate unused allowances from all
their vict^H^H^H^H husbands, but the sum of inherited
allowances is capped at 100% of the basic personal allowance,
so that any person's actual allowance is capped at 200%.
 
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