How to make the most of unused inheritance tax allowance
By Kirsten Hastings, 15 Aug 17
The UK tax office has recently updated its rules for transferring any unused portion of basic and additional IHT thresholds when the first person in a marriage or civil partnership dies.
You calculate the actual amount that is transferred to the surviving spouse or civil partner’s estate in two steps:
Step 1. Work out the percentage of additional threshold that wasn’t used when the first of the couple died.
You do this by dividing the unused amount of additional threshold by the total additional threshold that was available when the first of the couple died and multiplying the result by 100.
If the person died before 6 April 2017 the unused additional threshold and total available additional threshold are both deemed to be £100,000 so the unused percentage is 100%.
Step 2. Multiply the percentage of additional threshold that was unused when the first of the couple died by the maximum additional threshold available at the time of the survivor’s death.
This gives you the sum available to transfer.
Click through to see an example…
Tags: IHT
