Is the cash held in my mum’s joint checking account with my late nan topic to IHT?

My mom has a joint checking account with my grandmother who sadly handed away a few months in the past. 

Is the cash held within the account a part of my grandmother’s property? 

Or does it depend as my mom’s and fall exterior of my grandmother’s property?

Markus, by way of e-mail 

Joint bank accounts that are owned between parents and their children could be subject to IHT

Joint bank accounts that are owned between parents and their children could be subject to IHT

Joint financial institution accounts which are owned between mother and father and their youngsters might be topic to IHT

Myron Jobson, of That is Cash, replies: It is a good query as joint accounts are frequent, although principally between spouses. 

The inheritance tax guidelines are totally different for folks leaving wealth to their youngsters, and it is extra probably that the tax will apply in these instances the place an property exceeds the inheritance tax-free threshold.  

We have requested a chartered monetary planner to offer you an thought of the totally different issues. 

Ray Black, managing director of chartered monetary advisory agency Cash Minder Monetary Companies, writes: With a joint checking account, when one of many account holders dies, the surviving account holder inherits the deceased’s share of the cash and positive factors full management of the account.

Leaving money to charity can help to reduce the amount of your  IHT bill , says Ray Black of Money Minder Financial Services

Leaving money to charity can help to reduce the amount of your  IHT bill , says Ray Black of Money Minder Financial Services

Leaving cash to charity may help to cut back the quantity of your  IHT invoice , says Ray Black of Cash Minder Monetary Companies

Whether or not IHT is payable relies on two details:

  1. The connection between the deceased proprietor and the surviving proprietor 
  2. The amount of cash concerned and the scale of the deceased proprietor’s property

Within the case of joint accounts owned between a married couple or companions in a civil partnership, no inheritance tax can be payable, no matter the quantities concerned, because of the partner exemption guidelines.

Nonetheless, that is NOT the case for joint accounts which are owned between mother and father and their youngsters.

If the worth of the deceased father or mother’s property is over £325,000, IHT could also be payable at a typical charge of 40 per cent on the quantity above that determine.

In precept, solely half the worth of an equally-owned joint account can be taken in to account when calculating the scale of the deceased father or mother’s property as the opposite half was, in authorized phrases, thought of to be the surviving proprietor’s cash already 

In your particular instance, it’s crucial to know that if all the cash in that account initially got here out of your grandmother and it was lower than seven years in the past that the cash was successfully ‘gifted’ to the kid.

In different phrases, you must determine when your mom was added to the joint account or when the cash was paid in to the account out of your grandmother’s different property. 

If the cash got here totally out of your grandmother, then HMRC might contemplate the whole worth of her account to be a part of her property, thus making it accountable for inheritance tax. Likewise if a bigger proportion of the cash got here from her.

However an additional IHT tax exemption may apply 

Having mentioned that, the primary £325,000 of a person’s property is exempt from inheritance tax anyway, and an additional exemption that permits a person to go on some or all the worth of their important residence freed from inheritance tax (referred to as the ‘residence nil charge band’) may be out there.

Presently, that’s price an additional £125,000 per individual, nonetheless, on 6 April 2019 it goes as much as £150,000 after which will increase to £175,000 on 6 April 2020.

The residence nil charge band is simply legitimate when the property was the principle residence of the deceased and when the individual(s) inheriting the property are direct descendants (ie. youngsters, step-children and grandchildren).

The nil charge band allowances are transferable for married {couples} and people in a civil partnership which implies that at current as much as £900,000 may be handed on freed from inheritance tax.

In 2020, it should rise to £1million, made up of two mother and father’ allowances of £325,000 every plus two instances £175,000. It is half this quantity for single individuals. 

Lastly, though the usual charge of inheritance tax payable is 40 per cent of the quantity above the related nil charge bands out there, for individuals who go away at the least 10 per cent of the online worth of their property to charity, the speed of inheritance tax payable reduces from 40 per cent to 36 per cent. 

There are not any limits to the quantity somebody can go away to charity so this might assist to cut back the quantity of inheritance tax payable considerably. 


Ensure you’ve received the fundamentals coated earlier than beginning inheritance tax planning. Learn a That is Cash information to finding out a will here. 

Myron Jobson provides: Your mom’s place will develop into clearer as soon as the worth of your grandmother’s property is understood.

Assuming your grandmother left a will, the executor is accountable for calculating the worth of the property – which takes into consideration cash, property and possessions – and informing the taxman.

Some individuals select to rent a solicitor who specialises in probate to assist with some or all the duties concerned with valuing an property.  

In case you are aware about your grandmother’s funds, you would get a tough thought of what the IHT tax invoice would possibly appear like by utilizing our IHT calculator

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