New Inheritance Tax threshold for couples

A question about : New Inheritance Tax threshold for couples

Alistair Darling says he will raise it to Ј600,000 for couples.

How will this work?

Is it only when couples die at the same time or when the surviving spouse eventually dies?

In this case is the surviving spouse not a single person and why should they be treated any differently than those who have never married or indeed those who cohabit

Best answers:

• Thats what I wondered.
  I'm single and if I pasted away tomorrow what are the new limits for me?
• LOOK HERE
  This means that when the second partner dies, inheritance tax will not be charged on the first £600,000 of their estate, provided none of the allowance was used when the first partner died - for example if items were left to children or other family.
• There has been no change for unmarried persons.
  What has been done is that the existing Ј300000 allowance is now transferrable between spouses. So the unused portion of the allowance of the first to die is transferred to the surviving spouse.
  Nigel
• It looks to me as if you can now use the "double allowance" of a discretionary trust without having to go to the time & expense of setting up a trust.
• If the first person of a married couple only has a 100,000 pounds as his or her's half ot the estate.......when the survivor dies they can only use 100,000 pounds to top ut their 300,000 pound inheritance tax allowance...giving them a 400,000 tax free sum...not as you may think 600,000 pounds...............correct me if i am wrong...
• My mum died in 1999 so does that mean that if my dad dies (hopefully not anytime soon) his estate would have the Ј600,000 allowance or does it only apply from the date of the budget?
• Although the allowance is backdated indefinately......i think only the value of half the estate t the time of the first death would be added to the surviving person's 300,000 allowance......i think this is what they mean by Carry Forward allowance............
• Yes, but what about divorced people. Its hardly fair that singles will still have the Ј300,000 threshold. Why should some people have to pay more just because they are not married or divorced
• This is very complicated........but as i understand it if at the first death the estate is valued at 600,000 pounds,on the second death the second death has a 300,000 allowance and the carry forward from the first death would be a further 300,000 pounds giving a total allowance of 600,000 pounds....but if half the estate value on the first death is less than 300,000 pounds then it is onlt this reduced amount that can be added to the survivors own 300,000 allowance.................
• What is the cheapest way to arrange a Civil Partnership............WITH A DEAD PERSON............
• Wait ... and wait still further ....
  In the Finance Act 2006 huge changes were announced, impacting upon trust law. Then, as with other announcements made by this Government, came the supporting documentation; reams and reams of the stuff. The Finance Act 2006 looked significantly different from the implied (and headlined changes) originally announced.
  This is a feature of this government; they announce something which grabs the headlines. Then the fine print is released, often sometime later - only the fine print shows a different outcome to that implied with the headline grabbing announcement. The figures quoted may be the same, but when put into the context of the smallprint the implications to the average person are significantly different. And because they tend not to be so major as was first implied, they do not make good headlines; infact they are boring to read. And so the law gets passed with few adverse comments.
  The fine print is what is needed to be seen. When that is released, and it becomes law, only then we will know where we stand. Until then it will all be speculation and conjecture.
• This is all very simple.
  Many sensible people already had Wills to use Ј600k anyway - no financial change for them (on the surface)
  Many people didn't - they now get Ј600k despite being too lazy to have planned.
  Some people had spouses that died before they could plan (or maybe years ago before IHT was a big deal) - good news for them, they just doubled their NRB
  Anyone with a fancy Will for IHt COULD leave it alone - it will still work......however -
  Its important to note that the amount of the NRB a SECOND to die spouse can use of the firsts is PROPERTIANL to that already used.
  So Bob dies in 2007 and leaves Ј150k to his kids -he has used 50% of his NRB. His wife dies 20 years later when the NRB is now Ј600k.....she can only add on Ј300k being the 50% Bob didn't use (giving her Ј900k in total)
  Better that Bob gives her ALL the assets (and 100% of his NRB) so she can use 100% X 2 when she dies in the future.....if Bob WANTS to give cash to the kids then leave it to his wife and have HER give it just after his death. She has now made a 7 year gift and when she dies in 20 years time she will have no liability to IHt on that gift AND a massive NRB.
  So new advice is DONT have a fancy Will - give it ALL to your spouse and dont go leaving anything on 1st death elsewhere as you are, in effect, wasting some allowance!
  All pretty simple really.