Inheritance tax - respectfully request advice.

[Miletus]

Good day, my wife and I (both in our 70s) reside in Scotland.
We have a house (mortgage free) worth £450,000 plus savings of £100,000.
We want our children & grandchildren to have ALL our assets and have made a will to that effect.
How much Inheritance tax will we need to pay?
One of us will die before the other... how much Inheritance tax will the surviving person need to pay?
We are just a little confused and concerned about our children’s and grandchildren’s inheritance and would respectfully request advice.
Thank you & take care.

[Pezza54]

Hi

Welcome to LB

IHT in Scotland is similar to the rest of the UK (when the deceased has a will). The current rules are:

When the surviving spouse dies any unused NRB of the first spouse to pass can be brought forward so the total Nil Rate Band can be as much as 2 x £325k = £650k

In addition if their property is left to direct descendants there is a Residence Nil Rate Band (RNRB) maximum of 2 x £175k = £350k (provided the property value is over £175k)

Therefore the total NRB can be as much as £1m (£650k plus £350k)

So in you and your wife's position, with a property worth over £175k and leaving your estate to direct descendants, the estate will benefit from a maximum of £1m NRB (tax free allowance)
This should leave plenty of margin for an increase in property price and/or savings

[Miletus]

Hi Pezza54,
Many thanks for your reply which is very much appreciated!
Good to know that our inheritance for our children & grandchildren will be safely passed on without incurring any inheritance tax.
Just to clarify: Upon the death of myself, will my wife benefit from the maximum of £1m tax free allowance?

Once again thank you so much for your reply.
Take care.

[Pezza54]

She would provided all your assets are either in joint names or left to your wife in your will (except for money bequeathed to registered charities)

[Miletus]

Brilliant! That really clarifies everything. Thank you very much.
Keep up the good work and take care.

[sederunt]

She would provided all your assets are either in joint names or left to your wife in your will (except for money bequeathed to registered charities)

Scotland is different, moveable assets in joint names do not automatically pass to the survivor.


The £1M limit would not apply if your wife survives you. Everything that passes to a surviving wife is subject to spouse exemption and no IHT would be payable. The £1M threshold would potentially apply to the estate of the second to die (subject to the composition of the estate at that time).

However your wife might not inherit everything. In Scotland children have an entitlement to some of your moveable estate If you die first (with a will), your children would (collectively) have an entitlement to 1/3rd of your net moveable estate. But often this entitlement is renounced by children for family reasons.

[Miletus]

Thank you very much for your reply.
I like what you have said, ‘… no IHT would be payable’. Good to know that our assets (no IHT) will pass to our children when we go to the, ‘happy hunting ground’.

I know I’m biased but our children are, ‘the best’! Absolutely no worries whatsoever with them taking any kind of advantage.

I will shortly be posting a question on Powers of Attorney – not too sure about it..
Once again many thanks for your reply - much appreciated!