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taxadvisor.uk, Chartered Certified Accountant
Category: Tax
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Experience:  FCCA - over 35 years experience as a qualified accountant (UK based Practitioner)
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, if a sibling owns a house that the parents live in and

Resolved Question:

Hello, if a sibling owns a house that the parents live in and God forbid something happened to the sibling who is successful with their own business would there be problems with inheritance tax etc.
Submitted: 2 years ago.
Category: Tax
Expert:  taxadvisor.uk replied 2 years ago.

Hello and welcome to the site. Thank you for your question.

Please provide more information e.g.
- the value of the property;
- is the property in sole name;
- is the estate likely to exceed £325,000 in value

- was it a gift to sibling by parents in the first place with a right to live in it after transfer

Many thanks

Customer: replied 2 years ago.
Hi, thank you for your response so quickly. The answers to your questions are: the property was bought 12 months ago for 250,000. The estate would exceed 325,000. It is in sole name and was not transferred from parents to sibling.
Expert:  taxadvisor.uk replied 2 years ago.
Thank you for you reply and for additional information.

In simple terms, if you are single and die during the tax year 2014-2015 with an estate worth more than £325,000 (including money, property and investments, but after deducting debts and expenses such as funeral costs), 40% tax will become due on anything above £325,000.

You have not stated if you sibling is single or married. For example, if you leave behind an estate worth £500,000 the tax bill will be £70,000 (40% on £175,000 – the difference between £500,000 and £325,000).

However, if you are married or in a civil partnership, you may be able to leave more than this before paying tax.

You should also consider IHT implications of any gifts that have been made during your lifetime.

As well as on your estate at death, inheritance tax may also be payable on gifts you make during your lifetime, especially if you die within seven years of making the gift. They fall in categories as follows:

- Gifts that are always tax free irrespective of when you make them

- Potentially exempt transfers and seven years ule applies to these - if you survive for 7 years after making the gift, then the gift does not form part of the estate for IHT purposes and there is no tax payable related to it.

- Regular gifts out of giver’s income (as opposed to capital/savings)

- Payments to help with living costs

This is not an exhaustive list and more details can be founds here

https://www.gov.uk/inheritance-tax/gifts

General information on inheritance tax and IHT planning can also be found here

http://www.which.co.uk/money/tax/guides/inheritance-tax-explained/inheritance-tax-thresholds-rates-and-who-pays/

You are recommended to seek expert input if you thisnk your siblings financial affairs are complex to safeguard assets and minimise IHT payable.

I hope this is helpful and answers your question.

If you have any other questions, please ask me before you rate my service – I’ll be happy to respond.

taxadvisor.uk and other Tax Specialists are ready to help you
Expert:  taxadvisor.uk replied 2 years ago.

Hello

I notice you have viewed my answerto your question about IHT implications (</spanCustomerLast Viewed on 2/24/2015 at 10:56 PM).

Just checking to see if you have any issues relating to your question that I may not have addressed.

Please let me know if I can be of further assistance.

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