Inheritance tax bill on property
I am 35 and disabled. I live with my parents and my mum is also disabled. Our incomes are intertwined, the three of us supporting the three of us. But I am one of four children and my parents used the EU Regulation, allowing UK law, to make their will. I inherit everything and, depending on circumstance, will pay virtually zero inheritance tax. My will, however, is harder as I have neither husband or children. There is no cash involved, just a property. I will leave it (my parents fully support this) to my niece and nephew. However, inheritance tax is around 55%. Are there ways to cut the bill as they would have to sell a place they love to pay the tax? H.G.
I assume you live in France and note that your parents used the 2012 EU Succession Regulation to leave their respective share of the property where you all live to you alone, rather than to all four children.
Using UK law does not affect the French inheritance tax position, an important consideration for many readers, and of concern to you, in terms of your wish to leave the property to your niece and nephew. Sadly, however, your niece and nephew cannot avoid the 55% inheritance tax payable after a €7,967 tax-free allowance for each.
The most obvious solution would be for you to return to the UK following the death of your parents. You can then leave your estate to your niece and nephew without the burden of French inheritance tax.
An alternative, if convoluted, way would be to gift your share of the house to your parents while keeping the right to live there for the rest of your life.
Your parents would then each need to make a new will – leaving the property to the sibling parent of your niece and nephew. The sibling benefits from a €100,000 inheritance tax allowance on the share from each parent. Your sibling can then, in turn, leave the house to your niece and nephew who would get the same tax-free allowance.
However, you must survive 15 years from the gift date to avoid its value falling back on your estate.
Question answered by Barbara Heslop of Heslop & Platt
Tel: +44 (0)113 393 1930 -www.heslop-platt.co.ukcontact@heslop-platt.co.uk
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