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Hello Norman, I am one of the experts on Just Answer and pleased to be able to help you with your question.
There is commonly held misconception that beneficiaries are liable to Inheritance Tax (IHT). They are not, save for PETs, The deceased's estate is liable and if there are insufficient funds to meet IHT then the Revenue loses out.
The PETs run off at a taper over seven years and in the event of a decease within this time are added back to the estate for IHT. If the estate is insufficient to meet the tax on the PET, and PETs are the first to suffer IHT, then the liability cascades down to the beneficiary for immediate payment.
IHT is at 40% flat rate so on an estate of 726K then 126K is exposed to the tax, ie a tad over 50K.
I do hope that you have found my reply of assistance.
The exposure is 726K - 650K = 76K, so 30.4K tax due, sorry for the error! What could I be thinking of, 600K indeed?
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Your interpretation is largely correct.
Inter spousal gifts are outside the scope of UK taxation.
Beneficiaries of gifts are only liable for IHT if the estate cannot meet the tax due on assets over the tax free limit which can be as high as 650K as it is in this case.
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