Giving away money?

thestens

My mum, who is 88, wants to give her grandson £10 000 to help him get a deposit together to buy a house. She has not given him or anyone else a large amount of money before. When she ides we don't think she will be liable for inheritance tax. Will this be OK?

MrsManda

As far as I understand it she is able to give whatever she wants but if she dies within 7 years of the gift being made it'll still form part of her estate and thus be included for Inheritance Tax (though as you say, this is unlikely to be an issue).

However if she requires state care at some point this is likely to be seen as deprivation of capital and therefore still be counted when calculating her entitlement.

http://www.hmrc.gov.uk/inheritancetax/pass-money-property/exempt-gifts.htm

http://www.ageuk.org.uk/home-and-care/care-homes/deprivation-of-assets-in-the-means-test-for-care-home-provision/

le_loup

Look up "Deprivation of Assets" and the large number of similar threads on this board ... some as recently as yesterday!

thestens

Thank you both. After I posted this I realised there were other similar queries - sorry! Anyway, my question is answered.

Murdina

don't forget she can give away 3k per annum tax free and bring forward that allowance from last year - so if no other gifts this year or last and she did die within 7 years only 4k would be liable to IHT

ceeforcat

Murdina wrote: »

don't forget she can give away 3k per annum tax free and bring forward that allowance from last year - so if no other gifts this year or last and she did die within 7 years only 4k would be liable to IHT

OR: gift £6000 and loan £4000, documenting that it is a loan and not a gift. In April 2011, mother can write off the loan (document again) which is treated as another gift, leaving only £1000 potentiall liable.