Inheritance Tax - Gifts

weimo

Hoping someone can help here. I'm in the process of filling in inheritance tax forms as I sadly and unexpectedly lost my father earlier this year.

My question is to do with a gift made in 2008, I'm not sure how you calculate the relief, can you use the 3k per year allowance with an additional year for backdating? The gift amount was 15k so my calculations show there would be 0 to pay IHT wise on the gift even if the estate value was over the threshold.

Extremely grateful is someone could offer some advice.

Thanks in advance.

xylophone

http://www.hmrc.gov.uk/inheritancetax/intro/basics.htm

http://www.hmrc.gov.uk/inheritancetax/how-to-value-estate/gifts.htm
Have you read these? Any help?

weimo

Yes I had read these guides.......but was a little unclear.

I'm pretty sure you have an allowance of 3k per year with one year carried over. This makes 15k so 0 to pay. I was really looking for someone to confirm this as I do not want to make a mistake and HMRC think I'm trying to pull a fast one.

getmore4less

AIUI.

You only the allowance in the year the gift was given so £3k + £3k if the previous year was not used. you can't use 2009-2012 against this gift

If the gift was £15k that leaves £9k.

It uses up the nill rate band first so no IHT on that just a bit more on the rest if over the nill rate .

Don't forget the transferable nill rate band and spouse exemptions.

How has this gift been recorded in the documents you have(ie. how do you know about it).

weimo

OK thanks for that, that was not how I understood it at all. I thought you were allowed 3k per year and this accumulated as you went. That sucks then being over the threshold going to cost me 3.6k.

The gift is recorded as it was used as a deposit for my house and was required for money laundering purposes on the solicitors paperwork. Whether this is registered at HMRC or not I do not know.

CLAPTON

not knowing your personal circumstances, is it not possible that your mother made the gift even if your father actually wrote the cheque?

such things often happens in my family.

weimo

I'm afraid not, my parents divorced some time ago.........

xylophone

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

alun4

It will be partially exempt ( count the years ) as you have already linked to HMRC sites above.

Cook_County

weimo wrote: »

OK thanks for that, that was not how I understood it at all. I thought you were allowed 3k per year and this accumulated as you went. That sucks then being over the threshold going to cost me 3.6k.

The gift is recorded as it was used as a deposit for my house and was required for money laundering purposes on the solicitors paperwork. Whether this is registered at HMRC or not I do not know.

If you are correct it will cost you nothing. It is a liability of the estate.

Are you certain it was not a loan? Have you investigated a DOV to include charitable donations to reduce the rate? Have you included the right rate of taper?

getmore4less

Gifts use up the nill rate band(oldest first) there is only taper relief on the excess over the nill rate band and it is the newest gifts.

An isolated £15k gift does not get taper relief.