Apologies for a simple question but this is not really my area and I am a little confused ….
I have been asked to help complete an IHT 400 and am unclear about one aspect of the IHT 404.
There is a jointly owned property and a number of jointly held bank accounts. Property and accounts are jointly held (i.e. not as tenants in common) so will pass to the spouse by survivorship.
The will of the deceased leaves everything to the spouse apart from a £325,000 bequest to a child. There will therefore be no IHT to pay. T
The IHT 404 in boxes 404 and 409 seems to anticipate that a claim may be made for “spouse exemption”. I am unclear whether this spouse exemption has any relevance at all to this estate and whether claiming it adds anything.
I can understand the confusion caused the the use of the word “claimed” in the preamble to these questions. Its easier to understand if you read the text in the box beginning “Details of relief or exemption deducted” where it says “if the jointly owned assets….are passing to the deceased’s spouse or civil partner…you should deduct the spouse or civil partner…exemption here”. You have identified that the asset passes to the spouse by survivorship so the spouse exemption applies and should be included here.
Since the assets go directly to the spouse, the legacy to the child will need to be funded from elsewhere.
I am not entirely sure I should be encouraging someone who admits to being confused (though a tick for candour) and is aiding and abetting another who is perhaps more so. Especially since the Question but hopefully not the Answer reveals a fundamental lack of understanding of IHT
The deceased’s share of joint property passing to his surviving spouse automatically is taxable but exempt due to the spouse exemption so the property shares should be entered on the 404 and the exemption claimed. Fill in boxes 1 and/or 6 itemising the asset and boxes 2 and 9 for the exemption plus box 11 as the co -owners were not tenants in common.
Please do not attempt bomb disposal of a friend seeks your help!
Thank you for the answers so far. To continue the analogy used by Jack, whilst I may not be a bomb disposal officer I am a high ranking well qualified member of the military, so do know my own limitations and when to ask for help !
I think I have now correctly understood the position (which does accord with my previous understanding), but just to be clear if all the jointly owned property was owned jointly with the spouse the figure in box 49 of the IHT400 will be £0 ? Confirmation would be gratefully appreciated.
For competence in tax law intelligence is a necessary but not sufficient condition, plus requiring a nose for the counter-intuitive. The aggregate IQ of all HMRC staff is not a positive number and that of the reader of submitted forms is likely to be adjacent to zero or not be human at all.
The form must therefore ideally be filled in slavishly and precisely the right way or there may follow delay (a department speciality) or hassle.
Presumably there are no assets in sections 1, 2 and 4 so not in boxes 1 to 5.
You first enter all the details in section 6 plus the value of the deceased’s share in box 6 and also in box 8 even if there are no liabilities.
2 You do not enter 0 in box 9 but rather the amount chargeable entered in box 8 i(which is unhelpfully part of section 7) if full exemption is claimed. You also need to enter 0 in box 7 if there are no liabilities.
In section 9 box 9 you enter the full amount of exemption claimed which would then allow you to enter zero in box 10
Then tick the Yes box in box 11, and enter the value from box 8 into box 11 column A.
Box 12 is irrelevant but still enter zero and in box 13 enter the figure from box 9 as the other boxes are zero.
The form design is irritating in that some numbered sections contain more than one numbered box. And no sections numbered 3, 5, 8 or 10! What is thinking here?
The notes in form IHT400 Notes are slightly helpful but do not address the art of form filling. While I have an endogenous contempt for forms I acknowledge that HMRC prefer them as a means of communication (like all bureaucracies, no doubt including the military) and recognise that those who regularly fill them in often have an expertise that I lack.
Thank you !! That exactly matches how I have filed the form in, which seems to lead to the Joint assets section on the IHT400 itself showing as zero, and the value of the estate as effectively discounting to zero the joint interest.