inheritance

johnymurchi

Hi guys, apologies if this is in the wrong section,im after some advice please,my parents have recently divorced and as such have sold the marital home,as a result of this my mother is giving myself and 2 sisters 10k each.my 1s question is will we get taxed on this(its a gift) and if so what is the best way to keep as much of it to ourselves(im in the 40%) tax bracket so would it be better to put it into my partners/sons account? many thanks

Reaper

You won't be taxed on it unless your mother dies in the next 7 years, and even then only if her total estate (including what she has given away in the previous 7 years) exceeds the Inheritance Tax thresholds.

There are also some allowances. For example she can give away £3000 (in total) each year, so you could reduce any potential bill even more by getting her to gift you some before April and some after, particularly as she is allowed to make use of last year's allowance too if she has not already done so. For more on allowances see here.

Biggles

And if she should die within the seven years, you still won't be taxed on it; the estate will pay some Inheritance Tax but your own Income Tax rate won't have any bearing on the calculation.

greenface

try and get another 10k off your dad also

Cautious_Investor_3

Hi

I think the IHT tax question has been answered well by other posters, so I won't add my two peneth!

However with regard to where you put it to shelter it from tax in the future, I'd suggest an ISA would be as good a place as any.

If you are looking for deposit investments a Cash ISA each for you and your partner could shelter £10,200 in total. If you want to invest in collectives i.e. funds, the you could use a Stocks and Shares ISA, which can hold upto £10,200 each, so you could just take one ISA out in your own name.

Of course you could do £5,100 in a Cash ISA and and additional £5,100 in a Stocks and Shares ISA, all in your name, if you wanted to mix and match.

I hope this helps.

The Cautious Investor

Hermanmunster_2

Don’t like to put a damper on it but will Mum be able to manage with the money she gets from the settlement? It’s often fairly expensive halving a lifestyle and having to buy somewhere to live and perhaps live for many years on half what you thought you had especially with inflation taking off again. I would be wondering if it was wise to take money from Mum unless she is loaded from the settlement.

Biggles

Hermanmunster wrote: »

Don’t like to put a damper on it but will Mum be able to manage with the money she gets from the settlement? It’s often fairly expensive halving a lifestyle and having to buy somewhere to live and perhaps live for many years on half what you thought you had especially with inflation taking off again. I would be wondering if it was wise to take money from Mum unless she is loaded from the settlement.

Good point, Herman.

If Mum is left with just her capital, and the son is in the 40% tax bracket, who needs this money most?

Hopefully Mum has thought hard about this, she may need the funds in the future.