How JustAnswer Works:
  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site. Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.
Ask Sam Your Own Question
Sam
Sam, Accountant
Category: Tax
Satisfied Customers: 13938
Experience:  26 HMRC expertise, PAYE, Self Assessment ,Residency, Rental Income, Capital Gains, CIS ask for Sam Tax
16196420
Type Your Tax Question Here...
Sam is online now

In their wills a husband and wife leave everything to one another.

Resolved Question:

In their wills a husband and wife leave everything to one another. The Estate is worth £700,000.00. Included in that amount is a house worth £120,000.00.One of the parties dies. The survivor is concerned about the tax implications.
My understanding is as follows
Gross Estate £700,000.00
Less
The house passing by survivorship £120,000.00
Less
Spousal Exemption £250,000.00
Net Estate is therefore £330,000.00.
Tax is payable on £5000.00 at 40%.
Therefore £2000.00 tax is payable.
Is this correct?
Submitted: 3 years ago.
Category: Tax
Expert:  Sam replied 3 years ago.
Hi

Thanks for your question

No - anything left to each other does not form any part of the exempt allowance for the estate - its only assets/money left to others of gifts made in the last 7 years that were not exempt.
This is assuming you are both UK resident.

So, if all the estate is left from the first spouse to the second, and they have no gifts to consider for the last 7 years,then they have a full NIL threshold to pass to the surviving spouse, so when the second spouse passes away they have 2 x £325,000 nil band - so a total of £650,000 exemption on their estate. Then tax is due on any amount over and above the £650,000

So with a gross estate of £700,000 and there only being the second spouse, the first £650,000 in exempt and there then is £50,000 x 40% = £20,000

I am not sure where you get your exemption allowances from - or why you have deducted the house - but the information above is how its calculated.


Thanks

Sam

Sam and other Tax Specialists are ready to help you