Inheritance tax on marital property at 150%?


#1

I am dealing with the estate of surviving spouse who owned marital property jointly (tenants in common) with predeceasing spouse. Value of property is £400,000.

Predeceasing spouse left their half of property to the couple’s children, subject to a right of occupation for the surviving spouse for as long as surviving spouse wished. Surviving spouse was in occupation of property on death.

On death of predeceasing spouse, spouse exemption was applied to the gift of the property due to surviving spouses ipdi.

Subject of course to unused nrb & rnrb of predeceasing spouse, and surviving spouses own nrb & rnrb, my question relates to the inheritance tax treatment of the property now that the surviving spouse has died:-

  1. I believe that the value of the predeceasing spouse’s one half share in the property is to be included in the surviving spouse’s estate for iht purposes as a trust asset
  2. I believe then that the value of the surviving spouse’s one half share is to be included in the estate for iht purposes as an asset owned by the surviving spouse

Is this the correct approach, or is (under my point 2 above) the whole value of the property to be included as an asset owned by the surviving spouse such that the property is effectively taxed at 150% for iht purposes?

Helen Armstrong
Platt & Fishwick


(Simon James Northcott) #2

You have the correct approach-no 150% tax.

Simon Northcott