This may seem a deathly boring (pun intended) subject but since I don't have many readers to bore in the first place and BW specifically asked anyway, here it is.
I finally managed to track down some specific information, with examples, about the how the new threshold is calculated when unused inheritance tax exemptions are passed from one spouse (or civil partner - can't be seen to be discriminatory, can I?) to the other.
Essentially, what you get is the unused proportion of your spouse's exemption, multipled by the current exemption, which is then added on to your own.
So, regardless of the fact that the exemption was only £64,000 when my grandfather died, since he left all of it to my grandmother, 100% of the exemption was unused and therefore, at today's rates, his exemption is worth the full £312,000. And since her estate is worth nowhere near £624,000, we won't be paying Mr Darling anything at all.
If, on the other hand, he had left £32,000 to my mother when he died then he would have used up half of his exemption and the unused part would now be worth £156,000.
Simple, really. I just wish it was a little more obvious in all the commentary written about it when the change was announced.
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3 comments:
Thanks!
*stores away info in head hoping it will be accessible next time it's required*
It's a relief to know that we won't have to pay any tax on it all. I just hope that, in an attempt to claw back some of the money it's putting up to support the economy, the chancellor doesn't reverse the policy before probate has been granted. Not very likely, I know, but anything might happen in the next few weeks.
I don't think that they'd retrospectively do something like that.
It will be date of death not date that probate is granted on that is the key factor, even if changes are made (but I suspect this is a forgotten issue to them anyway!).
And the Tories say they'll raise the IHT threshold to a million when they come to power anyway. Which day cannot come soon enough as far as I am concerned (and I am a Brown despiser rather than a Tory supporter).
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