Terminal Illness - beating Inheritance Tax?

Twointhebush

If someone is terminally ill and over the inheritance tax threshold, are there any creative ways of them buying gifts, or getting cash to family and friends tax free, before it's too late? Can they employ a family member as a carer for instance?

Keep_pedalling

There are no creative ways at such a late stage in someone’s life, not legal ones anyway. If the have a relative who happens to be a qualified career they could pay then the going rate to provide care but it is not going to save a lot of tax.

agrinnall

There are the same rules on exempt gifts as for anyone else.


https://www.gov.uk/inheritance-tax/gifts

Apodemus

Keep_pedalling wrote: »

There are no creative ways at such a late stage in someone’s life, not legal ones anyway...

I’m not sure that it is totally correct. Depending on the circumstances there might be options around inheritance of farm-businesses or limited companies, possibly other specialist options that a smart tax account could advise. These would probably only be feasible if the sums involved are quite big, in which case it would be unusual for advice not to have been sought earlier.

Twointhebush

Ok, I didn't think so. Though as it's the new tax year how much money as tax free gifts can be given away as per normal?

Sibbers123

£3,000 per annum of which you can carry forward one years unused £3,000 so maximum of £6,000 if they didn't use it last year.

I would recommend professional advice. There are ways you can mitigate IHT but it will depend entirely on the individual's unique set of circumstances (are they married or are they a widow, what assets do they hold, how long do they expect to live etc and the answers to these questions will undoubtedly result in further questions).

Madeinireland

Withdraw a heap of money in cash and give it away to whoever you like or hide it away for future distribution when you are gone. How would the tax man be able to tell if you had done that or splashed it out on a good time before you met your maker?

Sea_Shell

Buy wine investments, to gift... who's to know it didn't all get drunk.??!!

But I'm sure if spending £000's on a blow out farewell party, took you just under IHT, HMRC would have a good hard look at those figures too.

Keep_pedalling

Madeinireland wrote: »

Withdraw a heap of money in cash and give it away to whoever you like or hide it away for future distribution when you are gone. How would the tax man be able to tell if you had done that or splashed it out on a good time before you met your maker?

You could do that perfectly legally, provided that the maximum gift to any individuals did not exceed £250. Any executor failing to declare large pre death gifts (or expensive assets purchased just before death) would be taking a seriously dangerous risk in committing such serious fraud.

Madeinireland

What if the executor genuinely didn’t know about it? I am executor for a friends will - how would I know if he had taken out funds and blown them on a horse race or given it to another relative? It would just be a bank withdrawal on the bank statement. I’m not a detective and there is a limit on how far I could go to investigate. He does like a flutter on the horses by the way 😀

Keep_pedalling

Madeinireland wrote: »

What if the executor genuinely didn’t know about it? I am executor for a friends will - how would I know if he had taken out funds and blown them on a horse race or given it to another relative? It would just be a bank withdrawal on the bank statement. I’m not a detective and there is a limit on how far I could go to investigate. He does like a flutter on the horses by the way 😀

In the unlikely case that an executor cannot trace where a large sum of money has vanished to, they would be wise to declare it as a gift if they don’t want HMRC pursuing them for the the tax.