Tax on possible inheritance? - Please help?

Tuesday_Tenor

blue_groove wrote: »

Ok, so if she gifted her daughter £50,000 that would only be subject to tax if my mother in law died within 7 years and left an estate worth over the £300k (or whatever), inclusive of the £50k.

That is very unlikely as she has zero of her own assets (no house etc).

Correct.
2012: Mum-i-L keeps £50K for herself and gives £50K to her daughter.
No gift tax in the UK and these gifts do not count as income, so no income tax to be paid, by either woman, on the lump sum.
Thereafter., both M-i-L and daughter (if tax payers) pay tax each year on the INTEREST of the sums they have in savings accounts etc., of course.

If M-i-Law dies within 7 years of the gift, having spent say £30K of her own £50K but has no other assets,

then the executors of her estate will have to declare that she had £20K and had given away £50K within last seven years. Total estate is deemed to be £70K, but this is well under the £325K inhetitance tax threshold, so there will be no IHT to be paid.