Inheritance Tax Gift

ConsumerWarrior
ConsumerWarrior Posts: 84 Forumite
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in Cutting tax
If I were to pay for an expensive holiday for a daughter/son, would this be regarded as a gift thus affecting the £3000pa IHT allowance to that child?
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  • getmore4less
    getmore4less Posts: 46,882 Forumite
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    There is no tax on gifts, if not exempt for any reason they become a PET on your estate.
  • Keep_pedalling
    Keep_pedalling Posts: 16,591 Forumite
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    The £3000, is an exception allowance, which simply means gifts up to that level can be excluded from your estate with emmediate effect. This does not stop you giving more away but anything over that become potentially exemp as it will not leave your estate for 7 years.

    All this only matters if your net worth takes you into IHT territory.
  • xylophone
    xylophone Posts: 44,348 Forumite
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    I'm not sure that the OP's paying the travel agent for the holiday would count under the IHT rules.

    It is not a cash gift passing to the offspring and can hardly be counted as a possession?

    It cannot be passed on or sold - if cancelled, the money would be returned to the OP not his offspring?
  • noh
    noh Posts: 5,797 Forumite
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    I believe a holiday would would count as a gift.

    From https://www.gov.uk/inheritance-tax/gifts

    "What counts as a gift
    A gift can be:

    anything that has a value, such as money, property, possessions
    a loss in value when something’s transferred, for example if you sell your house to your child for less than it’s worth, the difference in value counts as a gift"
  • xylophone
    xylophone Posts: 44,348 Forumite
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    I believe a holiday would would count as a gift.

    If the OP bought top price tickets for a night at the opera and took his child (or indeed anybody else along), would that be a gift for IHT purposes?
  • Tom99
    Tom99 Posts: 5,371 Forumite
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    xylophone wrote: »
    If the OP bought top price tickets for a night at the opera and took his child (or indeed anybody else along), would that be a gift for IHT purposes?

    I would say yes, its a gift.
  • Keep_pedalling
    Keep_pedalling Posts: 16,591 Forumite
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    xylophone wrote: »
    If the OP bought top price tickets for a night at the opera and took his child (or indeed anybody else along), would that be a gift for IHT purposes?

    Where the line is crossed does nor seem to be documented anywhere. We often hire out a hous3vor Villa with spare bedrooms, so we invite family and friends to join us, but I don’t add those to our gift list.

    We have also picked up the tab for days out with the family and that does not go down either. If I paid for a holiday without going myself then I would simply handover the cash for them to sort out myself, so I would definitely add that.
  • getmore4less
    getmore4less Posts: 46,882 Forumite
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    edited 15 February 2018 at 9:16AM
    Buy a pint for someone down the pub it's a gift.

    most people ignore the small stuff as much will fit into the £250pp exemption and can also fall into regular gifts from income.
    It can add up if you are buying dinners every week for mum and dad and don't have the income to support the spends.

    There are exceptions where you are paying for stuff for a dependent so that will include children before they are treated as independent adults and can also include others like the elderly.


    In the real world there will be loads of gifts that fall through the IHT net as executors just won't be able to find them unless documented.
  • kidmugsy
    kidmugsy Posts: 12,709 Forumite
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    ConsumerWarrior wrote: »
    If I were to pay for an expensive holiday for a daughter/son, would this be regarded as a gift thus affecting the £3000pa IHT allowance to that child?

    It would be a gift. But if you were to go on the holiday with them it might be different. Whenever I see a three-generation family on holiday together I think "Grandpa is getting his 40% discount".
    Free the dunston one next time too.
  • Sea_Shell
    Sea_Shell Posts: 9,344 Forumite
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    In the real world though, if you've paid a £6000 bill to TUI for a holiday, say 2 years ago. Who is realistically going to dig into this to the level of who was travelling on that holiday, and are TUI obliged to give out customer information like that.

    I suppose if HMRC wanted to make an "example" of someone, who may/maynot be in IHT territory then they could dig, dig, dig....but really???

    I've yet to read on here from anyone, who has been pulled up by HMRC about a gift not declared for IHT purposes that they've since been found out on. Anyone got any?
    How's it going, AKA, Nutwatch? - 12 month spends to date = 2.31% of current retirement "pot" (as at end March 2024)
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