Crtical illness payment/Inheritance tax

[peter p]

My BiL has just died after a very short illness due to cancer at the age of 56. He knew he only had a short time to live and sorted his affairs out and made a will. Everything goes to his wife and she is sole executor.
In the past (not at the time of death) he worked for a major paint manufacturer, days before his death their pension, I assume, paid a considerable amount of money into their joint account.
As a rough estimate his estate is valued at about £250,000. Made up of half the house, joint bank account savings etc. The critical illness payment is tax free but almost doubles the size of his estate, if it is included as part of it.
My question is, is the payment considered part of his estate for inheritance tax purposes?

[Anthony72]

Re: Crtical illness payment/Inheritance tax

AFAIK there is no IT between husband and wife or if there is the limit is much greater than 250K

https://www.moneyadviceservice.org.u...nheritance-tax

[peter p]

Re: Crtical illness payment/Inheritance tax

AFAIK there is no IT between husband and wife or if there is the limit is much greater than 250K

https://www.moneyadviceservice.org.u...nheritance-tax

thanks for the information, thats one less worry we have, thanks again.

[Amethyst]

Re: Crtical illness payment/Inheritance tax

Yes, there is no IHT payable on an estate passed between spouses, including the critical illness payment. When the wife later passes then her estate will benefit from both IHT reliefs - so possibly £650k IHT free ( just for future planning)

[peter p]

Re: Crtical illness payment/Inheritance tax

Yes, there is no IHT payable on an estate passed between spouses, including the critical illness payment. When the wife later passes then her estate will benefit from both IHT reliefs - so possibly £650k IHT free ( just for future planning)

Thank you for the confirmation Amethyst.