Inheritance tax?

[Bobbyboy]

What is the maximum amount that can be given in a will without paying inheritance tax?

[PallasAthena]

The size of individual gifts in a Will is irrelevant to whether Inheritance Tax [IHT] has to be paid. What matters is the total size of the deceased's Estate, their net assets after all their debts are paid.

The basic limit is currently £325,000. If the total value of the Estate is less than £325,000 then no IHT is payable.

If the Estate is more than £325,000 then in principle IHT may be payable (tax rate 40%) but it gets more complicated. This gov.uk site gives an explanation

How Inheritance Tax works: thresholds, rules and allowances: Overview - GOV.UK (www.gov.uk)

The most important things to note are:

1. Anything gifted to a husband/wife or civil partner is exempt from IHT.

2. The amount above which IHT is payable may increase where property is involved.

EDIT If this is related to your previous posts you say that Probate was granted in January 2023. IHT has to be paid by the Executors before Probate is issued so IHT should have been dealt with by now. The person receiving the gift does not have to pay tax on it.

[Bobbyboy]

Thank you for your reply but this has nothing to do with my previous posts.

Reason I ask is that I am an executor for my brothers estate and have just received a copy of the will where it states the following:
I give the maximum amount that can be given by this Will without inheritance tax becoming payable in respect of the gift to be divided equally between my sister XYZ and my sister ABC.

What does that mean?

[Pezza54]

Hi
Who wrote the will? Was it a solicitor?
Pallasathena is right about IHT on the estate. If your brother died owning a property valued over £175k then the nil rate band may be increased to £500k
The value of the gifts to your sisters does not affect the nil rate band and your sisters will not have to pay tax on any amount they receive.
There is a problem with the will. It doesn't state how much your sisters should receive, neither an amount or a % of the estate.
Do you intend to apply for Probate yourself or employ a solicitor?

[Bobbyboy]

Hi
Who wrote the will? Was it a solicitor?
Pallasathena is right about IHT on the estate. If your brother died owning a property valued over £175k then the nil rate band may be increased to £500k
The value of the gifts to your sisters does not affect the nil rate band and your sisters will not have to pay tax on any amount they receive.
There is a problem with the will. It doesn't state how much your sisters should receive, neither an amount or a % of the estate.
Do you intend to apply for Probate yourself or employ a solicitor?

Thank you for your reply.
My Brother owned two properties over £175 each and the will was drawn up by a solicitor, the exact wording being 'I give the maximum amount that can be given by this Will without inheritance tax becoming payable in respect of the gift to be divided equally between my sister XYZ and my sister ABC'.
I intend to employ a solicitor to act for me, the other executors being His original solicitor, assume that will be OK.

[PallasAthena]

Is the solicitor who is an executor acting as a joint executor with you? Where a solicitor is appointed as an executor the Will often provides for that solictor's law firm to carry out the work and be paid for it.

If the solicitor is acting as joint executor in his professional capacity I wouldn't have thought there was need for you to appoint a separate solicitor to advise you.

We have only seen one sentence from the Will, it may be clearer what was intended in the context of the Will as a whole.

[Pezza54]

Pallasathena's advice is right. No need to employ a second solicitor. The main beneficiaries could be unhappy to find out two solicitors' fees have been paid from the estate.
I assume it is the solicitor that is a named executor was the solicitor that drafted the will. If there is a problem regarding how much your sisters should receive, let the solicitor sort it out. You will have a chance to object to his or her solution.

[Pezza54]

For your brother's estate to receive the £175k residence nil rate band one of the properties will need to have been his main place of residence at some time during his life. The will needs to state that a direct descendant is to inherit the property.