inheritance tax
Discussion
Unfortunately my mum only has a few months left to live, she is trying to help us navigate IHT (no spouse / civil partner)
IHT will be quite sizeable due to the value of the house, savings etc.
my mum has a saving shares ISA account which has enough in to make a sizeable contribution to pay the IHT bill within the 6 months.
is it best to liquidate it now and put it into a joint savings account so it will be available to pay the tax bill?
I am aware HHRC look closely at joint accounts to make sure there is no attempt at dodging or paying less IHT - this is not the intention.
alternatively I assume when we engage a probate solicitor they will liquidate ISA, however will the funds be available to pay the IHT or held until probate is granted?
IHT will be quite sizeable due to the value of the house, savings etc.
my mum has a saving shares ISA account which has enough in to make a sizeable contribution to pay the IHT bill within the 6 months.
is it best to liquidate it now and put it into a joint savings account so it will be available to pay the tax bill?
I am aware HHRC look closely at joint accounts to make sure there is no attempt at dodging or paying less IHT - this is not the intention.
alternatively I assume when we engage a probate solicitor they will liquidate ISA, however will the funds be available to pay the IHT or held until probate is granted?
Personally, I wouldn't set up a joint account, as it could just make things more complicated than they need to be later on. Keep everything separate.
The ISA provider should be able to pay the IHT bill on the estate's behalf via the Direct Payment Scheme: https://www.gov.uk/paying-inheritance-tax/deceased...
It might be worthwhile contacting the ISA provider now to see if that's going to be possible?
You don't mention if your mother is a widow. If she is, remember to consider how much of her deceased spouse's nil rate band and residence nil rate band can be transferred to her when calculating her IHT liability.
Regarding available cash for payment of IHT, does she hold any life assurance policies or similar that pay out on death?
The ISA provider should be able to pay the IHT bill on the estate's behalf via the Direct Payment Scheme: https://www.gov.uk/paying-inheritance-tax/deceased...
It might be worthwhile contacting the ISA provider now to see if that's going to be possible?
You don't mention if your mother is a widow. If she is, remember to consider how much of her deceased spouse's nil rate band and residence nil rate band can be transferred to her when calculating her IHT liability.
Regarding available cash for payment of IHT, does she hold any life assurance policies or similar that pay out on death?
Many thanks that direct payment scheme is ideal. Hopefully it will allow the s&s isa recover a bit as well instead of cashing it in now.
She is a widower however her husband's estate was large so allowances were used up.
The house is being left to us so I think the allowance is £325+£175k before iht
She is a widower however her husband's estate was large so allowances were used up.
The house is being left to us so I think the allowance is £325+£175k before iht
Firstly sorry to read about your Mum.
As said I would avoid any set up of a joint account now.
Be aware that with ISA’s and indeed other Funds held outside the wrapper it may be possible to sell them and reinvest into a money market Fund in order to “ protect “ the sum and profit but otherwise leaving them untouched should allow you to use their worth to pay the necessary IHT.
Assuming your Dad’s affairs uses up his allowances in total then £500k is correct.
I’ve just completed my Executor duties for a relative and I managed to get some carry forward allowance from her husbands death 45 years prior.
As said I would avoid any set up of a joint account now.
Be aware that with ISA’s and indeed other Funds held outside the wrapper it may be possible to sell them and reinvest into a money market Fund in order to “ protect “ the sum and profit but otherwise leaving them untouched should allow you to use their worth to pay the necessary IHT.
Assuming your Dad’s affairs uses up his allowances in total then £500k is correct.
I’ve just completed my Executor duties for a relative and I managed to get some carry forward allowance from her husbands death 45 years prior.
I thought that when one partner dies their £325k allowance plus their £175k allowance for the house passes to the surviving partner, so the OP's mum effectively has £1m before IHT is payable?
OP - regardless, try and make use of your mothers annual £3k gift allowance which is exempt of IHT, plus unlimited £250 gifts to different people. In addition to the current 2025 - 2026 gift allowance, if the previous years allowances wasn't used then that can be used this year too, but I think you can only go back one year maximum?
My mum is in the same position as yours, with only a few months left to live. My mum made use of the 2024-2025 gift allowance by giving £1k each to me, my brother and sister. She duplicated this as she hadn't made use of her 2023-2024 allowance, and then in April 2025 she made the same £1k gifts again to the three of us as part of this years allowance.
If she has a will make sure you know where it is.
OP - regardless, try and make use of your mothers annual £3k gift allowance which is exempt of IHT, plus unlimited £250 gifts to different people. In addition to the current 2025 - 2026 gift allowance, if the previous years allowances wasn't used then that can be used this year too, but I think you can only go back one year maximum?
My mum is in the same position as yours, with only a few months left to live. My mum made use of the 2024-2025 gift allowance by giving £1k each to me, my brother and sister. She duplicated this as she hadn't made use of her 2023-2024 allowance, and then in April 2025 she made the same £1k gifts again to the three of us as part of this years allowance.
If she has a will make sure you know where it is.
The Gauge said:
I thought that when one partner dies their £325k allowance plus their £175k allowance for the house passes to the surviving partner, so the OP's mum effectively has £1m before IHT is payable?
The OP said:"She is a widower however her husband's estate was large so allowances were used up."
TwigtheWonderkid said:
The OP said:
"She is a widower however her husband's estate was large so allowances were used up."
True but to be fair the OP wasnt explicit about whether her husband's estate had all passed to his wife though. (in which case it might have all benefited from the spousal exemption - and if so she could now make use of his allowances as well as her own)."She is a widower however her husband's estate was large so allowances were used up."
I'm looking after mums finances with an LPA, as she is bed bound and terminally ill.
My brother has opened her mail and there is a bill to pay for £850. To keep things simple he was going to pay it with his money and then tomorrow when I can access mums online bank account I was going to transfer the money to him. However, there is a chance that inheritance tax may be a factor and therefore this could look like a gift from mum to my brother, that might need declaring.
Is it best to hold off paying the bill until I have online access to mums account and then pay it directly?
My brother has opened her mail and there is a bill to pay for £850. To keep things simple he was going to pay it with his money and then tomorrow when I can access mums online bank account I was going to transfer the money to him. However, there is a chance that inheritance tax may be a factor and therefore this could look like a gift from mum to my brother, that might need declaring.
Is it best to hold off paying the bill until I have online access to mums account and then pay it directly?
Rough101 said:
I d get a joint account of some description set up as a means to have household account to pay all the fees, run the house etc. during probate.
You ll need to declare that half of the money isn t actually yours during probate process, you declare what share is.
A joint account would be pointless to pay IHT as it will be frozen by the bank upon notification of death. At that point the job falls to an executor and an executors account should be opened and any IHT paid from assets that have been realised at that point. The executors account is used to collect those funds an distribute them in accordance with the law and also cover any of the estates expenses.You ll need to declare that half of the money isn t actually yours during probate process, you declare what share is.
Ziplobb said:
...A joint account would be pointless to pay IHT as it will be frozen by the bank upon notification of death..
None of my + late wife's were frozen (NatWest, Halifax, Nationwide). They simply acknowledged the fact and changed the name of the accounts to just me.(Maybe it's different if the joint account holders are not married / civil partners?)
The Gauge said:
I'm looking after mums finances with an LPA, as she is bed bound and terminally ill.
My brother has opened her mail and there is a bill to pay for £850. To keep things simple he was going to pay it with his money and then tomorrow when I can access mums online bank account I was going to transfer the money to him. However, there is a chance that inheritance tax may be a factor and therefore this could look like a gift from mum to my brother, that might need declaring.
Is it best to hold off paying the bill until I have online access to mums account and then pay it directly?
Tbh as long as you keep studious records and assuming you are both Executors I’m not sure it will make much difference but if it were me I’d be simply paying the bill directly from your Mums account which you presumably have got control over anyway. My brother has opened her mail and there is a bill to pay for £850. To keep things simple he was going to pay it with his money and then tomorrow when I can access mums online bank account I was going to transfer the money to him. However, there is a chance that inheritance tax may be a factor and therefore this could look like a gift from mum to my brother, that might need declaring.
Is it best to hold off paying the bill until I have online access to mums account and then pay it directly?
WrekinCrew said:
Ziplobb said:
...A joint account would be pointless to pay IHT as it will be frozen by the bank upon notification of death..
None of my + late wife's were frozen (NatWest, Halifax, Nationwide). They simply acknowledged the fact and changed the name of the accounts to just me.(Maybe it's different if the joint account holders are not married / civil partners?)
Due to health issues I'm likely to die well before my partner so I really need to be on top of this sort of thing!
98elise said:
WrekinCrew said:
Ziplobb said:
...A joint account would be pointless to pay IHT as it will be frozen by the bank upon notification of death..
None of my + late wife's were frozen (NatWest, Halifax, Nationwide). They simply acknowledged the fact and changed the name of the accounts to just me.(Maybe it's different if the joint account holders are not married / civil partners?)
Due to health issues I'm likely to die well before my partner so I really need to be on top of this sort of thing!
This is on the assumption it is in credit.
Yes you would obviously have to advise them and then at some point they will change the account to just be in your name.
I’ve just been helping my FIL deal with my late MIL’s affairs and for all of their joint accounts there were virtually no hassles in this being done.
alscar said:
The Gauge said:
I'm looking after mums finances with an LPA, as she is bed bound and terminally ill.
My brother has opened her mail and there is a bill to pay for £850. To keep things simple he was going to pay it with his money and then tomorrow when I can access mums online bank account I was going to transfer the money to him. However, there is a chance that inheritance tax may be a factor and therefore this could look like a gift from mum to my brother, that might need declaring.
Is it best to hold off paying the bill until I have online access to mums account and then pay it directly?
Tbh as long as you keep studious records and assuming you are both Executors I m not sure it will make much difference but if it were me I d be simply paying the bill directly from your Mums account which you presumably have got control over anyway. My brother has opened her mail and there is a bill to pay for £850. To keep things simple he was going to pay it with his money and then tomorrow when I can access mums online bank account I was going to transfer the money to him. However, there is a chance that inheritance tax may be a factor and therefore this could look like a gift from mum to my brother, that might need declaring.
Is it best to hold off paying the bill until I have online access to mums account and then pay it directly?
roca1976 said:
Many thanks that direct payment scheme is ideal. Hopefully it will allow the s&s isa recover a bit as well instead of cashing it in now.
She is a widower however her husband's estate was large so allowances were used up.
The house is being left to us so I think the allowance is £325+£175k before iht
You say the estate is sizeable - it is worth noting that the RNRB (£175K) can be lost or reduced for estates worth over £2mShe is a widower however her husband's estate was large so allowances were used up.
The house is being left to us so I think the allowance is £325+£175k before iht
alscar said:
98elise said:
WrekinCrew said:
Ziplobb said:
...A joint account would be pointless to pay IHT as it will be frozen by the bank upon notification of death..
None of my + late wife's were frozen (NatWest, Halifax, Nationwide). They simply acknowledged the fact and changed the name of the accounts to just me.(Maybe it's different if the joint account holders are not married / civil partners?)
Due to health issues I'm likely to die well before my partner so I really need to be on top of this sort of thing!
This is on the assumption it is in credit.
Yes you would obviously have to advise them and then at some point they will change the account to just be in your name.
I ve just been helping my FIL deal with my late MIL s affairs and for all of their joint accounts there were virtually no hassles in this being done.
She will already have enough to deal with when a big IHT bill lands on her lap.
98elise said:
alscar said:
98elise said:
WrekinCrew said:
Ziplobb said:
...A joint account would be pointless to pay IHT as it will be frozen by the bank upon notification of death..
None of my + late wife's were frozen (NatWest, Halifax, Nationwide). They simply acknowledged the fact and changed the name of the accounts to just me.(Maybe it's different if the joint account holders are not married / civil partners?)
Due to health issues I'm likely to die well before my partner so I really need to be on top of this sort of thing!
This is on the assumption it is in credit.
Yes you would obviously have to advise them and then at some point they will change the account to just be in your name.
I ve just been helping my FIL deal with my late MIL s affairs and for all of their joint accounts there were virtually no hassles in this being done.
She will already have enough to deal with when a big IHT bill lands on her lap.
When you die the account will be changed to reflect just her ( or the other way round ) ownership of said joint account.
alscar said:
98elise said:
alscar said:
98elise said:
WrekinCrew said:
Ziplobb said:
...A joint account would be pointless to pay IHT as it will be frozen by the bank upon notification of death..
None of my + late wife's were frozen (NatWest, Halifax, Nationwide). They simply acknowledged the fact and changed the name of the accounts to just me.(Maybe it's different if the joint account holders are not married / civil partners?)
Due to health issues I'm likely to die well before my partner so I really need to be on top of this sort of thing!
This is on the assumption it is in credit.
Yes you would obviously have to advise them and then at some point they will change the account to just be in your name.
I ve just been helping my FIL deal with my late MIL s affairs and for all of their joint accounts there were virtually no hassles in this being done.
She will already have enough to deal with when a big IHT bill lands on her lap.
When you die the account will be changed to reflect just her ( or the other way round ) ownership of said joint account.
98elise said:
Great, thats why we set them up as joint. I didn't want the bills going unpaid if everything was in my name. This way it transitions seamlessly and all she has to deal with is my personal accounts which don't have any direct debits etc.
Yup. In all honesty most Financial institutions these days are pretty well set up for bereavement issues and have specific departments to assist.
If your Partner needs help at the time then she could obviously also use the services of a Solicitor who quite often have menu priced services to go alongside probate etc if that’s what needed.
If you haven’t already keeping a list of all of your single and joint accounts and / or investments in one place is also probably not a bad idea.
Gassing Station | Finance | Top of Page | What's New | My Stuff