Cash Gift

terri72

My Mother-in-Law wants to give us a substantial cash gift, as she feels it will be more useful to us now, rather than leaving it in her will. Can someone advise if the tax man will want to get his hands on some of it and if so, whether there's a legal way of reducing the hit

fengirl_2

There is no gift tax in the UK.
The gift will form part of your MIL's estate for IHT purposes if she dies within 7 years. However the estate will bear the tax, not you.

tyllwyd

You haven't said how old or frail (or otherwise) your MIL is - be careful if there is any chance that she might go into a care home in the next few years because the Local Authority might decide that she had deliberately deprived herself of assets.

localhero

fengirl wrote: »

There is no gift tax in the UK.
The gift will form part of your MIL's estate for IHT purposes if she dies within 7 years. However the estate will bear the tax, not you.

It depends how 'substantial' the gift is. If its value exceeds the nil rate band of £312,000, then the recipient will become liable for the IHT of 40% on the surplus if the person making the gift dies within 7 years.

The Will can expressly stipulate that the estate bears the tax instead. If the gift is below £312,000 and the giver dies before 7 years then the gift will utilise the first part of their nil rate band (and hence no IHT) for the recipient.

Tyllwyd also makes a valid point about care fees. If MIL doesn't leave herself means to pay any care fees, the Local Authority may not fund her care and so may look to you to pay for it.