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bigduckontax
bigduckontax, Accountant
Category: Tax
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Concerns the completion of the Return of Estate Information

Customer Question

Concerns the completion of the Return of Estate Information - form IHT 205.
As you know my wife died in March 2014. The amount entered in Box G is about £414k. All her sole and her joint share of assets have been left to me in the Will except for a few legacies totalling about £13k to family members and not to charities. There are no lifetime gifts involved in the Estate. Should I have deducted the legacies (13k) from the 414k (Box G) and put the balance in Box J?. If not please give a reason. This will mean that the value in Box K should be about £13k.
Submitted: 2 years ago.
Category: Tax
Expert:  bigduckontax replied 2 years ago.
Hello, I'm Keith and happy to help you with your question.
You seem to have it to a T. As the residue passes to you and is thus inter spousal and beyond the reach of UK Inheritance Tax (IHT); the few minor bequests should escape IHT altogether.
So pleased to be able to confirm the position.
Please remember that when you pass on your estate will have the normal IHT allowance of 325K, but you will be entitled to have the unused IHT allowance from your spouse's added to inflate your 325K to a theoretical maximum of 650K.
Customer: replied 2 years ago.

Dear Sir,

Thank you for your reply but you have not actually answered my question. Should I have deducted the legacies (£13K) from the £414k in box G and then put the balance in box J. Unfortunately, when I die my estate will exceed the £650 limit so there will be IGT to pay anyway. I know I am being very fussy and the rules may change in the future but please bear with me.

Expert:  bigduckontax replied 2 years ago.
Yes, I do understand. The unused balance of the spouse's 325K will still be available and by the time you pass on the 325K current limit at which IHT kicks in may well have been increased in the interim. Any surplus over these two allowances plus any charitable or certain other bequests plus any inter spousal disposals, remember you might just marry again, would be taxed at a flat rate of 40% (36% if over 10% of your estate are charitable bequests).
Sorry to be so long in response, I was at my GPs.
Customer: replied 2 years ago.

Dear *****,

Thank you for your latest reply. Would you please answer my original question for which I have paid £18. The question is "Should I have deducted the legacies to family members of about £13K from the £414k entered in Box G and put the balance of about £401k in Box J? Please just answer Yes or No.

Expert:  bigduckontax replied 2 years ago.
I did tell you in my original answer 'You seem to have it to a T'
What you propose is essentially correct.
bigduckontax and other Tax Specialists are ready to help you
Expert:  bigduckontax replied 2 years ago.
Thank you for your support.

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