Gift/ Inheritance tax

DaveW3000

Hi there

My apologies if this isn't in the right section.

My question is relating to inheritance tax. A relative of mine would like to gift me a sum of money to go towards a deposit for a house (£20k-£30k). My relatives concern is that if they die in the next 7 years then I will get a bill through my door for the inheritance tax.

My understanding was that this wouldn't be the case, and what would happen is that the gift figure would actually be counted into my relatives estate (which will be over the £325k threshold) and the tax on the gift would be added to the tax figure of the total sum of the estate?
I know I've over simlified this as the % tax would be dependant on how many years had passed ect.

Which one of us is right?

xylophone

http://www.scottishwidows.co.uk/Extranet/Literature/Doc/FP0608

If the donor dies within 7 years of making a PET, it fails and
becomes a chargeable transfer for IHT purposes. If this
happens, it’s necessary to calculate whether any IHT is due.
If the failed PET falls within the donor’s available nil rate
band, there’s no IHT to pay on the gift. If the failed PET
exceeds the donor’s nil rate band, the recipient of the PET is
normally liable to pay the IHT due, but HMRC can claim from
the estate if it’s unable to recover the tax otherwise.

Keep_pedalling

As long as your relative has not gifted over their nil rate band then there will be no demand on this gift.

DaveW3000

Thank you both, that's cleared that up