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IHT400 and associated forms query (GWROB)
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jeffian
Posted: 03 June 2018 11:55:14(UTC)
#11

Joined: 09/03/2011(UTC)
Posts: 954
Don,

You say that completing the online form results in a calculation of £8400 IHT payable. Working backwards, that tells you that it values your mother's net estate at £346,000 vs. your estimate of £240,000. There seem to be very few 'inputs' to your figure, so is it not possible to see where the discrepancy arises?

Like others, I have a feeling that it will relate to the house. Do remember that the Probate Value is the value at the date of death, not the value at the date of gift with reservation of benefit.
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Donald Bedford
Posted: 03 June 2018 16:14:26(UTC)
#12

Joined: 30/05/2018(UTC)
Posts: 13
jeffian wrote:
Don,

You say that completing the online form results in a calculation of £8400 IHT payable. Working backwards, that tells you that it values your mother's net estate at £346,000 vs. your estimate of £240,000. There seem to be very few 'inputs' to your figure, so is it not possible to see where the discrepancy arises?

I hear what you are saying, but even the house at its maximum value around a year ago, my mother's estate still doesn't come anywhere close to the IHT threshold of £325k - so I know that i have entered something in the wrong place or entered something twice or some such.

It is the fact that on the surface, my mother's estate is quite simple, that means that I know that no IHT is payable. It is just a matter of filling in the forms correctly to show that.

If it wasn't for her gift of her equity in the house in 2013 and the fact that she has a few shares, I could fill in the IHT205 and be much, much happier.

jeffian wrote:
Like others, I have a feeling that it will relate to the house. Do remember that the Probate Value is the value at the date of death, not the value at the date of gift with reservation of benefit.

Yes thanks, I'm aware of that and I'm using the 2018 figure - although one of the forms (I can't remember which one - there are so many) wanted the value of the gift at the time it was made (Q3 2013). We had the house valued in Q3 2015 so I am using that as a 'datum figure' in order to calculate the 2013 and 2018 values using the Nationwide calculator. Incidentally, Zoopla also agrees (to within around £400) on the historical value for Q3 2013.

Don
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jeffian
Posted: 03 June 2018 22:13:31(UTC)
#13

Joined: 09/03/2011(UTC)
Posts: 954
So can you work out how the aggregate amount of the assets you have declared come to £346,000 instead of the £240,000 you say they are worth?
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Mr J
Posted: 04 June 2018 00:22:15(UTC)
#14

Joined: 30/09/2014(UTC)
Posts: 143
https://www.gov.uk/hmrc-...ce-tax-manual/ihtm04071

I think if you don’t understand the forms and you can’t work out how they are calculating any tax due then you should be employing someone who does and can.

I very much doubt that zoopla is going to be seen as an acceptable source of property valuations for IHT purposes (if IHT is due) by HMRC. A professional valuation report would normally be expected and may still be challenged by the district valuer.
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Donald Bedford
Posted: 04 June 2018 07:54:39(UTC)
#15

Joined: 30/05/2018(UTC)
Posts: 13
jeffian;63325 wrote:
So can you work out how the aggregate amount of the assets you have declared come to £346,000 instead of the £240,000 you say they are worth?

In short, No.

The figure of £8,400 IHT liability was my first attempt at the IHT 400 - and when I got that figure, I knew it was wrong. My second go produced a different figure (can't remember whether higher or lower) and my third attempt produced a negative figure (!). These were all using a pdf which automatically gave me the IHT figure. Obviously there were mistakes in the form.

Two more attempts (not to mention several highly stressed hours later) and the form now says zero IHT to pay - so I'm thinking it is either right or very nearly so, however, I'm going to get a professional of some sort to run over the figures & form to check.

Mr J;63328 wrote:
https://www.gov.uk/hmrc-internal-manuals/inheritance-tax-manual/ihtm04071

I think if you don’t understand the forms and you can’t work out how they are calculating any tax due then you should be employing someone who does and can.

I very much doubt that zoopla is going to be seen as an acceptable source of property valuations for IHT purposes (if IHT is due) by HMRC. A professional valuation report would normally be expected and may still be challenged by the district valuer.


I would agree - if the estate is heading towards the £325k threshold. As her part of the house was/is worth around £200k, I don't think they'll look to carefully. The figure is reasonably accurate and not a 'shot in the dark' guesstimate.

Both Zoopla and Nationwide House Price Calculator aren't that accurate - but when we had the house valued back in Q3 2015, the three professional valuers that came found valued the house with a spread of around £50k - so they are not entirely accurate either.

I'm loathe to spend unnecessary money to prove that there is no IHT to pay on an estate worth in total around £240k. Sure, I'll have to spend some to get a professional check the forms but why pay to get the house re-valued just for HMRC purposes?

After all, this is why I'm filling the form in myself rather than passing it over to my solicitor who has already told me they will charge around £2k plus the court fee to arrange probate.

Thanks for the replies/help/suggestions offered. It is appreciated.

Don
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jeffian
Posted: 04 June 2018 09:29:39(UTC)
#16

Joined: 09/03/2011(UTC)
Posts: 954
Don,

"jeffian;63325 wrote:
So can you work out how the aggregate amount of the assets you have declared come to £346,000 instead of the £240,000 you say they are worth?

In short, No."

If in doubt, always safer to get professional advice, but I still don't understand why it is proving so difficult to reconcile your figures. My Old Mum died in April 2016 and I've just dug out her IHT400. There are various boxes into which you put the value of the deceased's assets - which you say in your mother's case were quite limited anyway - and at Box 79 these are all totted up to produce "Gross total of the estate in the UK". You think this should be £240,000 but to generate in IHT bill of £8400, the online calculator must make this £346,000 (ignoring any deductible expenses) - a difference of £106,000. Surely a manual calculation should highlight where the discrepancy arises?
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Graham P.
Posted: 14 August 2018 12:45:10(UTC)
#17

Joined: 08/05/2018(UTC)
Posts: 1
A gift with reservation of benefit is not a gift for IHT purposes, and so your mothers share of the property will still form part of her estate. As a result the 7 year period and taper rules do not apply
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Samual Saunders
Posted: 14 August 2018 13:15:03(UTC)
#18

Joined: 15/04/2018(UTC)
Posts: 194
Just confirming that your Mother's gift of 44% of the house value does not count at all, never mind the 7 year rule.

A gift cannot be made where the exact same item (44% of the house value) is still being used just as before. The only exception to that would be if she had then paid a markatable rent to you for staying here. You would have to have declared that as additional income also.

So, how does that calculation now balance the figure that you have had?

Sam
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Donald Bedford
Posted: 19 August 2018 13:03:51(UTC)
#19

Joined: 30/05/2018(UTC)
Posts: 13
Graham and Sam, thanks for the replies.

Okay, some thoughts ...

If my mother's 'gift' of her share of the house doesn't count, it will mean that her 44% share will be considered for IHT purposes (which is a relief as she is way under the threshold anyway)?

Am I reading that correctly?

Will my entry of this as a 'gift' be ignored by HMRC meaning that it would count as her share of the house passing to me and my wife jointly on her death (as it would have done if she hadn't made this 'gift')? Actually thinking of it, her will simply passes everything to me if I survive her and not jointly to myself and my wife.

If so, that would mean that there is no potential for CGT on her share of the property??

I was wondering if her 'gift' of approx £95k to each of us in 2013 (her 44% share in the house) would make us liable for CGT and if so, what sort of figure we'd be looking at.

Sent the 'best guess' IHT400 to HMRC in mid-July. Any idea how quickly they'll get back to me (I've already had probate granted).

Cheers,

Don
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Samual Saunders
Posted: 19 August 2018 13:24:42(UTC)
#20

Joined: 15/04/2018(UTC)
Posts: 194
Hi Donald,

You wrote - 3) She originally purchased the house with us back in 1996 - her equity in the property at that time was 44%. She gifted her share to myself (sole beneficiary of her will) and my wife in August 2013 (which is less than 7 years ago) with a reservation of benefit (which means I have to complete an IHT403 form??)

From what you say, there is no IHT liability at all.

CGT is a separate issue. I am unsure if you were resident with her then, but assuming not, this value then would have appreciated until the time of her death. Therefore, the increase in the 44% value to to 44% of the value at death would be considered as a capital gains tax.

Once you calculate the gain that you and your wife have made, you both have a CGT allowance (2 allowances) to offset against that gain, so the tax liability can be reduced or lost altogether.

I will leave it to you to calculate as it's easy to look up the allowances.

The passing of the estate to you has no tax liability on you at all.

Hope this clears things up for you.

Sam
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