IHT Question 30 November 2013 at 1:45PM edited 30 November -1 at 1:00AM in Cutting Tax 10 replies 823 views

Ronin1978111

Hi, I have a question on Inheritance tax.

My mother has terminal lung cancer and wants to give me 5K outside of her will, in order to not show my siblings that one is valued more that the other.

I am always there for her unlike the rest of her children so she wants to gift me this money to help pay off my credit card debt.

My question is, can she just gift me this money, without any implications upon her passing?

Her estate will be well below the IHT threshold.

Thanks in advance

le_loup

Yes she can.

Ronin1978111

Thanks, that is a straight answer.

Can I assume that there will be no implications because her estate is below the threshold or is it that she can gift 3k a year or 6k if she didn't use the previous years allowance?

Just need peace of mind

le_loup

There is no tax on gifts in the UK; any value.
Therefor IHT is the only consideration; the estate will be below the IHT threshold; no problems.
The £3K is an IHT consideration.

Mojisola

Ronin1978111 wrote: »

My mother has terminal lung cancer and wants to give me 5K outside of her will, in order to not show my siblings that one is valued more that the other.

Who is her executor? The executor will have access to her bank records and will see the £5k withdrawal so it may not stay private.

Ronin1978111

I am her Executor

holly_hobby

The 5k gift will be included in the valuation of her estate - BUT annual gift exemptions may be applied against it.

This is because we each have an annual 3k exempt general gift allowance (£5k for marriage of child/grandchild etc), with the option to carry foward or add the previous yr's unused allowance (only the immediately preceeding yr though), to the current yr.

So for example, if Mum has not made any gifts last yr, she has an available exempt gift allowance of £6k for this yr (ie 3k from 2012 & 3k 2013).

So even if mum's net estate on death will exceed current nil rate band entitlement, then at least 3k is exempt, but if this is the only gift over a 2 yr period (ie 2012 and 2013), then the whole 5k will be exempt.

She needs to keep clear records of this for any later HMRC inspection of her estate on death. As although her current net estate may fall within IHT exemptions (which may be upto 650k if there is a previously deceased spouse whose estate didn't utilise any or all of their own IHT exemptions on death), whom knows what future windfalls/lottery wins she's in for

IHT can be complicated .... I've tried to keep it simple, so shout if you need any further clarification.

Hope this helps, with sympathy to Mum and family, for the position her health is currently in x

Holly xx

le_loup

Ronin1978111 wrote: »

Her estate will be well below the IHT threshold.

You may have missed this holly hobby.

holly_hobby

le_loup wrote: »

You may have missed this holly hobby.

Yes thanks, but you may have missed this Le Loup.....

holly_hobby wrote: »

She needs to keep clear records of this for any later HMRC inspection of her estate on death. As although her current net estate may fall within IHT exemptions (which may be upto 650k if there is a previously deceased spouse whose estate didn't utilise any or all of their own IHT exemptions on death), whom knows what future windfalls/lottery wins she's in for

Which considering she's still (thankfully) on this mortal coil, it does need to be considered for accurate guidance - which is what the OP requested.

Ronin1978111 wrote: »

Can I assume that there will be no implications because her estate is below the threshold or is it that she can gift 3k a year or 6k if she didn't use the previous years allowance?

Just need peace of mind

All bases now covered for them ...;)

Hope this helps

Holly x

le_loup

...... or overly complicating the originally simple question!


Holly, your knowledge in this area is unparalleled but we are all guilty at some time or other of displaying extensive knowledge that can lead other posters to be terrified of the possible permutations of answers to questions they have not asked.

holly_hobby

Problem is IF the estate exceeds NIL rate threshold at her actual death, being aware of utilising available exemptions will be important.

With apologies, if my point has overcomplicated the post for anyone, this wasn't my goal or intention .

Holly