Tax on gifts before 7 yr period

sloughflint

dontknowwhatimdoing wrote: »

Surely I am allowed, as his sibling, to give him a lump sum from the estate of our mother without incurring the 7 year business?

Only via a deed of variation.

dontknowwhatimdoing

I meant to ask John Pierpoint - your message about expectation and integrity - I think I know what you are saying but any chance of spelling it out for me?
(My daughter wears a T-shirt with a slogan on it - 'natural blond, please speak slowly')
I love it because she is very clever! I just want to know I have caught your drift!!
XX:o

dontknowwhatimdoing

O hello! How do I do the Deed then? Does it involve solicitors or can I do it myself? And does it take long? All I want to do is shove some money into his bank account. X (After probate I mean)

sloughflint

dontknowwhatimdoing wrote: »

O hello! How do I do the Deed then? Does it involve solicitors or can I do it myself? And does it take long? All I want to do is shove some money into his bank account. X (After probate I mean)

You wouldn't be able to do it yourself. Very quick to sort though.
Some info here:

They allow the beneficiaries of a deceased's estate to re-write the distribution of the estate so that it passes to the 'right' beneficiary and/or in the most Inheritance Tax efficient way. This can be done in the two years after the date of death.

http://www.martineau-johnson.co.uk/publication_event/guides/deedofvariationguide.pdf

http://deedofvariation.org.uk/Content/default.asp

dontknowwhatimdoing

Out of interest then - and this is not intended to be anything other than a simple question because I am not a crook - after I inherit everything, who would know the difference between me spending £15,000 on a car or putting same into a different bank account?
I must be dim because I find it a crazy situation that I am not free to do as I see fit at the time of actual inheritance.

dontknowwhatimdoing

Thank you. I do understand, I just think it so unfair. Sorry if I am a being a pain.
X

Eyesparky

dontknowwhatimdoing wrote: »

I must be dim because I find it a crazy situation that I am not free to do as I see fit at the time of actual inheritance.

You can give any amount of money away you want but the tax will treat it as a Potentially Exempt Transfer i.e. one which will be exempt from IHT after 7 years. Common sense would likely agree with you but our tax system can be a bit of an overcomplicated pedant .

jiggy2

dontknowwhatimdoing wrote: »

Out of interest then - and this is not intended to be anything other than a simple question because I am not a crook - after I inherit everything, who would know the difference between me spending £15,000 on a car or putting same into a different bank account?
I must be dim because I find it a crazy situation that I am not free to do as I see fit at the time of actual inheritance.

to answer your question no one will know - under self assessment it is the responsibility of the person completing the forms to ensure he/she completes it to the best of his/her knowledge.

Anyways if you wanted to give say £12,000 away and have not made any potentially exempt transfers this tax year or last (6th April to 5th April)-then you could give £6,000 (using £3000 annual exemption for 2009/10 and 2008/09 b/f). And your husband could give £6,000 (again using his annual exemptions). You can gift as much as you want to your husband exempt from IHT. You wouldn't be breaking any tax laws doing that.

dontknowwhatimdoing

Thank you for this - I had not remembered roll overs etc.. So really I could go ahead and not feel like a criminal!
And perhaps if I can manage to hang on for 7 years, everything will be okay!!!
I married a Bank Manager - should have found myself a solicitor/taxman instead:p
XX

hardpressed

Can I ask Local Hero as question? 3yrs ago I gifted the house I was living in to my daughter the value was £299000, I then moved into another house. When my husband died many years ago we were hard up and he had nothing to leave. The house I now own is worth about £300000. Can you tell me what the IHT liability would be if I popped my clogs.