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IHT for couples

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?
Reply to
Roger Mills
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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.

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 :

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DG

Reply to
Derek Geldard

Reply to
Terry Harper

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?

Reply to
Jeff Allen

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.

Reply to
Jonathan Bryce

In message , Jeff Allen writes

# 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.

Reply to
John Boyle

In message , Jonathan Bryce writes

Thanks. I havent found that bit yet. Can you point me?

Reply to
John Boyle

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

Reply to
Toom Tabard

Yes, similarly, what happens to jointly owned assets. The initial info that has been published is not clear at all.

Reply to
John Boyle

"Terry Harper" wrote

What happens if the surviving spouse subsequently marries again -- do they lose the unused IHT allowance from their first husband/wife?

Reply to
Tim

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%.

Reply to
Ronald Raygun

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