Gifts and tax

d712

CLAPTON wrote: »

you have been given the answer

I'm sorry but I'm still not entirely sure that's why I'm looking for clarification. If my parents gave a gift that exceeds £3000 and then died within seven years would the recipient be liable to pay tax on the amount over £3000?

dzug1

d712 wrote: »

I'm sorry but I'm still not entirely sure that's why I'm looking for clarification. If my parents gave a gift that exceeds £3000 and then died within seven years would the recipient be liable to pay tax on the amount over £3000?

Not if the parent's estate, including the gift, is less than the IHT threshold. In any case it would be the whole gift that would be taken into account, not just the excess over £3K

CLAPTON

d712 wrote: »

I'm sorry but I'm still not entirely sure that's why I'm looking for clarification. If my parents gave a gift that exceeds £3000 and then died within seven years would the recipient be liable to pay tax on the amount over £3000?

IHT, in general, if payable is paid from the estate and not from recipient of the gifts

xylophone

See http://www.hmrc.gov.uk/inheritancetax/paying-iht/who-pays.htm
for information.

getmore4less

IN very VERY rare circumstances a recipient of a gift can be taxed within the 7 year window when the donor dies.

In general there needs to have been high value gifts(in excess of the nil rate band) and not much left in the estate.

The numbers we are talking about here it is not going to happen.

fiscalfreckles

One part of all this that I don't get...How on earth does anybody ever prove what someone gave as a gift? Say they gifted cash to their grandchild above the £3k/£6k limit and then passed away within a year or two?

dzug1

Mostly they don't have to prove it - it's up to their honesty and that of their executors (and the latter's competence as well.)


Plus the possibility that your estate might be one of those singled out by HMRC for a deeper look.

CLAPTON

fiscalfreckles wrote: »

One part of all this that I don't get...How on earth does anybody ever prove what someone gave as a gift? Say they gifted cash to their grandchild above the £3k/£6k limit and then passed away within a year or two?

the executors are accountable for the probate documents and signs to say they are true

of course if the decrease's record keeping is poor then gifts could easily be missed out.

getmore4less

fiscalfreckles wrote: »

One part of all this that I don't get...How on earth does anybody ever prove what someone gave as a gift? Say they gifted cash to their grandchild above the £3k/£6k limit and then passed away within a year or two?

In practice a few £K here or there makes little difference especially when a lot of it is cash hidden in the normal day to day spending.

In depth analysis going back 7 years just does not happen often looking for PETS.

even if solicitors are involved they just ask the relatives for the information, they might have a look back to see if the estate seems to have lost a lot of value and often there are other factors like the testator inherited so where has that gone(HMRC can spot these)

The issue for the solicitors it would be expensive to do the work so they have to justify it to the beneficiaries so often don't.

IHT is for most practical purposes a voluntary tax of the few people that have the asset levels to need to plan it is relatively easy to avoid legally that's why so few estates pay any IHT, most are exempt for various reasons or the planning has sorted them in advance.

For married/civil partner couples they need to have assets over £650k to even bother about the PET exemptions

Newbold

fiscalfreckles wrote: »

One part of all this that I don't get...How on earth does anybody ever prove what someone gave as a gift? Say they gifted cash to their grandchild above the £3k/£6k limit and then passed away within a year or two?

In practice it's an impossibility for executors, unless the deceased left full records (which most don't).

HMRC would investigate larger estates, no doubt, but only, I imagine, if they have some evidence to suggest that the executors haven't made a complete declaration.