Is inheritance tax payable on education?

JAZ63

Hi everyone,

Hope you can help.

My mother-in-law has recently past away and her estate is being calculated for probate. She very kindly, over the last two years, paid to put our son through private education as he was having problems at our local state school.

Probate is being sorted out now and the two executors are my husband and my brother-in-law. There are three other siblings. The estate is very simple and my mother-in-law's will clearly states that everything must be divided equally amongst the five beneficiaries (my husband and his four siblings).

We must declare any gifts received over the last seven years for inheritance tax calculations and I have two questions:

1). Are gifts to grandchildren for educational purposes exempt from inheritance tax? (The fees were about £9000 a year and he was there for two years).

2). As the Will states the estate should be divided equally should any gifts to our son be taken from my husbands share of the estate?


There are other grandchildren and they didn't recieve any gifts for education as far as I know.

Regards,

Jazz

le_loup

JAZ63 wrote: »

1). Are gifts to grandchildren for educational purposes exempt from inheritance tax? (The fees were about £9000 a year and he was there for two years).

2). As the Will states the estate should be divided equally should any gifts to our son be taken from my husbands share of the estate?

1) No, the gifts are not exempt.
2) No, the value of the current estate is the amount that has been willed.

John_Pierpoint

JAZ63 wrote: »

Hi everyone,

Hope you can help.

My mother-in-law has recently past away and her estate is being calculated for probate. She very kindly, over the last two years, paid to put our son through private education as he was having problems at our local state school.

Probate is being sorted out now and the two executors are my husband and my brother-in-law. There are three other siblings. The estate is very simple and my mother-in-law's will clearly states that everything must be divided equally amongst the five beneficiaries (my husband and his four siblings).

We must declare any gifts received over the last seven years for inheritance tax calculations and I have two questions:

1). Are gifts to grandchildren for educational purposes exempt from inheritance tax? (The fees were about £9000 a year and he was there for two years).

2). As the Will states the estate should be divided equally should any gifts to our son be taken from my husbands share of the estate?


There are other grandchildren and they didn't receive any gifts for education as far as I know.

Regards,

Jazz

Roughly what is the estate worth? More than 325K? 650K?

The deceased can have made gifts of 3K per year IHT free and I'm 99% sure that in the first year, one lot of 3K can be sort of back dated.

If I've got it right, you are half way to being home and dry.

There is also a provision allowing gifts of £250 to any number of other individuals - Perhaps MIL realised this before gifting?

Do you have any other children for whom there could have been a need to subsidise their education?

Was the money paid to you (both) or directly to the school? Who was named on the schools invoice?

I don't suppose MIL managed to dress up any of her payments as a charity contribution? After all our current Prime Minister was educated by a charity.

le_loup wrote: »

1) No, the gifts are not exempt.
2) No, the value of the current estate is the amount that has been willed.

Plus the balance of the gifts (failed PETS)?.

More to the point: Who is going to pay the extra IHT payable on the gifts (PETS).

PET: Potentially Exempt Transfer (InHeritance Tax free provided the donor lives 7 years).

System

Regular payments out of income of a level that does not reduce the standard of living of the donor are also exempt.

John_Pierpoint

ie does not require the donor to eat into their capital thus reducing their potential IHT payment.

The government is near bust - it needs our money.