Inheritance Tax 28 November 2009 at 9:36AM edited 30 November -1 at 1:00AM in Cutting Tax 4 replies 660 views

jtb2412

Was hoping someone can possibly help with a 'gifting' situation?

Parent (in her 80s) has 4 children and has an estate worth over £350,000 (including the house). She's looking to cut inheritance tax and wants to make gifts to her 4 childen.

I understand that she can make up to £3000 in any tax year plus other gifts such as wedding gifts, individual gifts of £250 each etc etc (HMRC website) but is there any other ways in which she can gift money?

Happy to answer any other questions if need be

Many thanks in advance.

dzug1

Depending on how her late husband's estate was distributed she may have a somewhat larger tax free limit - up to twice as much. That could solve the problem

She can give to charity

She can survive 7 years - if in good health highly likely these days.

jtb2412

Hi dzug1, thanks for the reply.

Husband's estate went to her approx 20 years ago. Not sure about the 7 year thing, anything can happen ! She's in her 80s so it's anybody's guess as to how much longer she has.

She won't give to charity as she has 4 children she wants to give the money to.

I think she's also a bit worried about having more than 50K in the bank due to the recent financial problems in the banking industry - she doesn't want to be opening new accounts at her age.

CLAPTON

If her husbands estate went to her 20 years ago then the IHT allowance on her estate will be 650,000 so no tax will be payable in any case.

So she can give whatever she wants to who ever she wants and there will be no IHT to pay.

milla

"Depending on how her late husband's estate was distributed she may have a somewhat larger tax free limit - up to twice as much. That could solve the problem"

I think what dzug1 is referring to is this ...............

Since October 2007, you can transfer any unused Inheritance Tax threshold from a late spouse or civil partner to the second spouse or civil partner when they die. This can increase the Inheritance Tax threshold of the second partner from £325,000 to as much as £650,000 in 2009-10, depending on the circumstances.

http://www.hmrc.gov.uk/inheritancetax/index.htm

http://www.hmrc.gov.uk/inheritancetax/intro/transfer-threshold.htm