Lifetime gifts question

aroominyork

My father is elderly and increasingly frail and for the last few years has been paying for various family members' holidays so he can see us enjoy them. I have two tax questions about IHT and lifetime gifts when he eventually dies. First, if he transfers say £6000 to me for me and my wife to have a holiday, will that be recognised as £3000 each and hence allowable as a lifetime gift, or will it all be attributed to the person whose bank account received it? Second, is it right that the seven year taper period is reset to zero each time a new gift is given, so that if he makes a new gift today, a gift given five years ago now has to run another seven years before being IHT-exempt?

xylophone

http://justwillsandlegalservices.co.uk/latest-news/the-7-year-rule-inheritance-tax-and-lifetime-gifts/

Keep_pedalling

Assuming this is the only gifting of this type in the financiL year this gift will use up all of his annual allowace, so £3000 of it will effectively stay in his estate for the next 7 years. You can adjust that slightly in that he could give you £5750, and the remaining £25O to your wife, as you can give as many individuals £250 as you like and that money will drop straight out of his estate.

Does not really matter if each gift goes into the same joint account, as long as he keeps good records.

Taper relief only applies if your gifting exceeds your nil rate band so unless he has gifted over £325k you can forget that.

getmore4less

Each gift runs it's own time line and drops out at 7 years.

Linton

aroominyork wrote: »

My father is elderly and increasingly frail and for the last few years has been paying for various family members' holidays so he can see us enjoy them. I have two tax questions about IHT and lifetime gifts when he eventually dies. First, if he transfers say £6000 to me for me and my wife to have a holiday, will that be recognised as £3000 each and hence allowable as a lifetime gift, or will it all be attributed to the person whose bank account received it? Second, is it right that the seven year taper period is reset to zero each time a new gift is given, so that if he makes a new gift today, a gift given five years ago now has to run another seven years before being IHT-exempt?

It's £3000 total per year not per gift for obvious reasons.