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Inheritance Tax

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Cannot find a thread for this...……:( so hope is OK:-


I usually give my two adult children £3,000 pa from their inheritance as I believe I can do this without them being liable for inheritance tax on it ( I realise other taxes may be due such as Income Tax), and my query is, that both of them have just received £8,000 each from their Grandmother’s will and so how, if any, will that affect what I give them? And/or will they now be liable for Inheritance Tax?


Comments

  • The £3000 is the total gift allowance not per person so unless you are gifting as a couple then half of that sum stays in your estate for 7 years.

    They will never pay tax on this because ant IHT due will come out of your remaining estate, not clawed back from them. What other people give them is of no relevance.

    If you do actually need to lower the value of your estate to reduce IHT, you are better off giving larger amounts early on to increase the chance of you outliving the 7 year rule.


  • Cannot find a thread for this...……:( so hope is OK:-


    I usually give my two adult children £3,000 pa from their inheritance as I believe I can do this without them being liable for inheritance tax on it ( I realise other taxes may be due such as Income Tax), and my query is, that both of them have just received £8,000 each from their Grandmother’s will and so how, if any, will that affect what I give them? And/or will they now be liable for Inheritance Tax?



    Any monies received from their grandmother's will has no bearing whatsoever on the amounts gifted by you to them.
  • Mojisola
    Mojisola Posts: 35,571 Forumite
    Part of the Furniture 10,000 Posts Name Dropper
    I usually give my two adult children £3,000 pa from their inheritance as I believe I can do this without them being liable for inheritance tax on it ( I realise other taxes may be due such as Income Tax), and my query is, that both of them have just received £8,000 each from their Grandmother’s will and so how, if any, will that affect what I give them? And/or will they now be liable for Inheritance Tax?

    A gift isn't income so they won't have to pay income tax on the gifts or the inheritance.

    Inheritance Tax is paid from the estate of the deceased, not by the recipients of the inheritance (except in some rare cases).

    As Keep pedalling says, the amount you can give from your estate is £3000 per year, not £3000 per person.
  • Thank you purdyoaten2, Keep pedalling and Mojisola, I had completely misunderstood the "rules" on Inheritance Tax.
  • Thank you purdyoaten2, Keep pedalling and Mojisola, I had completely misunderstood the "rules" on Inheritance Tax.

    You should keep a record of all your gifting to make life easier for your executors when the time comes. You should also familiarise your self with the nil rate band rules and residence nil rate band rules, so you can establish if and by how much of your estate falls into IHT territory.
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