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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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My father died recently. My brother and I are joint executors

Resolved Question:

My father died recently. My brother and I are joint executors of his will. My mother is still alive and all his estate passes to her. I would like to take on his car, valued at £18k. My mother would like me to have it and my brother has no objection. How do we go about calculating the inheritance tax liability? I am a 40% tax payer.
Submitted: 1 year ago.
Category: Tax
Expert:  taxadvisor.uk replied 1 year ago.
Hello and welcome to the site. Thank you for your question.

Please advise if your father's estate exceeds the threshold for IHT purposes?

If his estate has been passed on your mother then there should be no IHT due. An estate is exempt from Inheritance Tax if the deceased left everything to their husband, wife or civil partner, who lives permanently in the UK. More information on this can be found here

https://www.gov.uk/inheritance-tax/leaving-assets-spouse-civil-partner

This being the case, your mother can gift you the car at the value shown for probate purposes and there is no IHT and/or CGT payable by either person.

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.

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Customer: replied 1 year ago.

The total estate is worth approximately £1.2m. It will be liable to IHT on her death. If she gifts me the car, I am assuming that if she lives for more than 7 years it will not be part of her estate?

Expert:  taxadvisor.uk replied 1 year ago.

Thank you for your reply.

You are correct in your understanding... the gift would be treated as a potentially exempt transfer for IHT purposes and the seven year rule would apply.

Please accept my condolences on the demise of your father.

I hope this is helpful.

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