Inheritance tax question

[Bobbyboy]

If someone leaves approx £1 million pounds in his estate and says in the will "The Will leaves the maximum amount which could be given without inheritance tax becoming payable to his sisters, and the balance of the estate is left to three well known charities".
How much inheritance tax is payable, how much tax on the balance and how much is left for each of the sisters? And is that tax free.

Thank you if you can give me a rough idea as I have no clue.

[BlakSheep]

From my understanding, the tax-free allowance threshold for an individual is £325k - but others may be able to give more detailed info.

[Mal161]

Personal allowance is £325,000 but if you have a residence, then there is a residential allowance of £175,000. Therefore each individual has £500,000 before tax. If you are married, or widowed, then there may be a second allowance of the same amount to carry forward so that a married couple can pass on £1,000,000 as full allowance of you both without ant taxation. Above that, the tax is 40%. Hope this helps

[sederunt]

It might depend on personal circumstances for example whether there was any non-exempt gifting within 7 years of death etc.


One interpretation:


If only full NRB is available - sisters share £325,000 charities share £675,000. No IHT payable but estate needs to be reported to HMRC because it is not an excepted estate.


If full transferable NRB available from a predeceasing spouse - sisters share £650,000 charities share £350,000. No IHT payable but estate needs to be reported to HMRC because it is not an excepted estate.

[Bobbyboy]

What is NRB?

[Mal161]

NIL RATE BAND - the allowance set for everyone (£325,000 )

[BlakSheep]

Interesting podcast with Martin Lewis from 2024 on IHT and probate. It may be of use?https://www.bbc.co.uk/sounds/play/p0j4p5c7?