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F E Smith
F E Smith, Advocate
Category: Law
Satisfied Customers: 12079
Experience:  I have been practising for 30 years.
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I live with my parents in their home. In the will my mother

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I live with my parents in their home. In the will my mother wishes the house to go to my father next and then to me her son. I pay all house hold bills from my account and have been doing this for the past 15 years.
The property is currently valued at approximately £950000.My Question is would I have to pay inheritance tax on it is so how much and is there a way for me not to have to pay the inheritance tax on it if possible.Thanks

Hello for clarification - do you have any siblings?

would you live there or sell?

Customer: replied 12 months ago.
I have 2 sisters both live away and I live at home with parents.I would live there and not sell the house.

If there was a magic way of not paying inheritance tax, everyone would do it.

There would be two nil rate band is allowable, £325,000 each which means that you only pay inheritance tax on the value of the house for probate purposes, everything over £650,000.

Just because you pay the household bills doesn’t necessarily mean that you have a financial interest in the house because at present, it seems that it’s legally owned either by your mother or mother and father.

Even if they had transferred the property to you, to escape inheritance tax, then it is a Gift with Reservation which is treated as though it is not a gift at all but a sham gift because they continued to live in the property. For them to give you the property and it escape inheritance tax (after the seven year period) they would need to give you the property lock stock and barrel and divest themselves of any interest in it and you would have to have been able to have sold it or remortgaged it or dealt with it as every you wished.

I am not aware that any person who has been resident in the property and has contributed substantially to the property who has claimed an equitable/financial interest in the property successfully to mitigate inheritance tax. It is possible for the person who was been resident in the property and contributed substantially towards that property to claim an equitable/financial interest in the property and to realise that when the property sold but I’m not aware of it ever having applied to HMRC.

There may be some obscure case law somewhere which supports this contention but researching extensive case law is beyond the scope of the site. Barristers charge about £350 per hour for it and them advice on this is probably going to cost about £600 plus VAT.

What you would be looking to do would be to get the revenue to accept that you had an equitable/financial interest in the property by virtue of the contributions you have made to the fabric of the property over all these years and that that equitable/financial share should be exempt from inheritance tax.

As it is at present, the revenue will only consider the legal title which is whose name the property is currently registered in.

Can I clarify anything else for you?.

I’m happy to answer any specific points arising from this.

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If you still need any point clarifying, I will still reply because the thread does not close.

Best wishes.


F E Smith, Advocate
Category: Law
Satisfied Customers: 12079
Experience: I have been practising for 30 years.
F E Smith and 2 other Law Specialists are ready to help you

My name is ***** ***** I have been a solicitor for more than 35 years

While you will have to pay Inheritance Tax it will only be on £100,000 due to the newest tax relief which came in in April 2017

Full details here