Hi all, We are currently looking at my MIL’s estate planning. My husband and his sibling are very unfamiliar with this. Coming from an engineering background, I’m more comfortable with numbers. I’ve done some research but I’m new to the UK ( There aren’t IHT, CGT where I come from). We have spoke to a tax adviser last week but we still have some unanswered questions
- Trust, Business Relief( BPR) and £2mil threshold towards RNRB.
- My MIL has 2 trust that is IHT free : a discretionary trust and a loan trust ( the original loan amount has been withdrawn ). Both are IHT free at the moment.
- She also has some BPR investments ( more than 2 years) Are these counted towards the £2mil estate threshold for RNRB? The tax adviser couldn’t answer this, which concerns me. My research shows trust is not, but BPR is included. Could you please clarify this ?
- Gifting to reduce estate below £2mil I read that outright gifting reduces estate immediately. If my MIL doesn’t live more than 7 years after gifting, the gift will be IHT taxed but she gets to reserve the RNRB if her estate falls below £2mil.
Giving the following scenario: Estate at death : £2.5mil Trust : £300k ( free of IHT) BPR: £500k NRB : £650k RNRB: £350k
Without gifting, her estate towards RNRB = £2.5mil - £300k trust = £2.2mil ( if my above understanding is right) . Her RNRB will be tapered and the allowance now becomes £250k IHT = ( £2.2mil - £650k NRB - £250k RNRB - £500k BPR) * 40% = £320k
If she gifts out £200k before death , her estate = £2.5mil - £300k trust - £200k gift = £2mil Her RNRB remains £350k As the gift is within 7 years, it is subjected to IHT tax IHT = (£2mil - £650k NRB - £350k RNRB -£500k BPR) * 40% + £200k gift * 40% = £280k
Do I get it right ?
CGT on property My MIL inherited a holiday home from her parents in the 90s. If she is to sell the house today, how is she taxed on CGT. Does the house’s original value be inflated to today’s value ? My research says otherwise but it doesn’t seem to be logical to me.
My husband and his siblings both own property here. If the house of left to one of them, is it subjected to 2nd home tax ?
Many thanks.