Gifting money

kingle15216

My grandparents want to start gifting money intended for inheritance to their 4 grandchildren. Their estate wouldn’t be above the inheritance tax threshold so does that mean they are able to gift whatever value they want without it being liable for tax? Also, if they did require care in the future, could gifts given be clawed back. I keep seeing this ‘£3000’ limit but from what I see that’s only when inheritance tax comes into play? Help gratefully received!!

Keep_pedalling

There are no limits on gifts, the £3000 allowance is simply the amount you can give per annum that does not fall under the 7 year rule for IHT.

Their main concern should be not to leave themselves short for anything they may need in the future. As for care costs, yes if they give too many of their assets away it may well de dreamed as deliberate deprivation of assets.

kingle15216

So because they won’t be above the IHT threshold they can give more than the £3000 per annum then?

AskAsk

here is a link that explains about gifting money
https://www.gov.uk/inheritance-tax/gifts

and here is a link about care fees and gifting
https://www.which.co.uk/later-life-care/financing-care/gifting-assets-and-property/gifting-assets-what-are-the-rules-alp865l0wlum

sweetsand

kingle15216 said:

So because they won’t be above the IHT threshold they can give more than the £3000 per annum then?

Hi OP
No. They can give away 3k each per tax year and if they have not given away anything last tax year they can give away 6k the first time for this and last tax year.  They can also give away as many 250 pound gifts to different people but please read up on that. You can give as many gifts of up to £250 to as many individuals as you want. Although not to anyone who has already received a gift of your whole £3,000 annual exemption. None of these gifts are subject to Inheritance Tax.
As another said, deprivation of assets. I worked with soc services a few years ago and they were hot on people chasing money for care home fees where it had been given away when the person gifting had a good idea they may have gone into a care home soon or a few years down the road.

Btw, IHT thresholds are increasing so you may want to look that up as well


ATB
x

kingle15216

sweetsand said:

kingle15216 said:

So because they won’t be above the IHT threshold they can give more than the £3000 per annum then?

Hi OP
No. They can give away 3k each per tax year and if they have not given away anything last tax year they can give away 6k the first time for this and last tax year.  They can also give away as many 250 pound gifts to different people but please read up on that. You can give as many gifts of up to £250 to as many individuals as you want. Although not to anyone who has already received a gift of your whole £3,000 annual exemption. None of these gifts are subject to Inheritance Tax.
As another said, deprivation of assets. I worked with soc services a few years ago and they were hot on people chasing money for care home fees where it had been given away when the person gifting had a good idea they may have gone into a care home soon or a few years down the road.

Btw, IHT thresholds are increasing so you may want to look that up as well


ATB
x

Thank you... though this example on the gov website seems to contradict what you’re saying? 

ExampleSally died on 1 July 2018. She was not married or in a civil partnership when she died.

Sally left 3 gifts in the 7 years before her death:

• £300,000 to her brother 6.5 years before her death
• £50,000 to her sister 4.5 years before her death
• £150,000 to her friend 3.5 years before her death

Sally is not entitled to any other gift exemptions or reliefs.

There’s a £325,000 inheritance tax threshold. Anything below this amount is tax free.

£300,000 is used up by the gift Sally gave her brother. There’s no tax to pay on his gift.

The remaining £25,000 is used up by her £50,000 gift to her sister. There’s tax to pay on the amount not covered by the threshold. That means there’s tax to pay on £25,000 of the gift to Sally’s sister at a rate of 24%.

The £150,000 gift given to her friend is taxed at a rate of 32%.

Sally’s remaining estate was valued at £500,000 and charged at the usual 40% inheritance tax rate. Sally used up the tax-free threshold on gifts given before her death.

Gifts are not counted towards the value of your estate after 7 years.

Savvy_Sue

Mickey666 said:

What does 'hot on people' actually mean in practice?   Even if someone has deliberately deprived themselves of their assets, can the recipients of any such gifts be legally compelled to return the gifts?  

No, but the giver will be assessed as if they still had that money. 

Suppose I have £100K. I realise I'm going to need a substantial amount of care in a couple of years time, and I don't want to have to pay for it. So I give away £90K, and sure enough, 6 months later things get worse, I need help, and the council come and assess my ability to pay for the help I need, or my ability to contribute towards a care home. The council can ask for my financial records going back - well quite a long way if they're so inclined, but definitely over the last couple of years. 

If I only had £10K, I might get the help they say I need / are able to provide without having to make a contribution. BUT they say "hang on, you had £100K, you gave it away, so you are required to pay for / make a contribution towards the help you need." They don't care where that contribution comes from. 

This is tricky enough if you're trying to get help in the form of home visits, but if you're in need of a residential care home, I would not, in any case, want to leave myself with no choice - no choice because what the council is willing to pay for and what I'd actually enjoy may be two different things. 

Morglin

Mickey666 said:

sweetsand said:

kingle15216 said:

So because they won’t be above the IHT threshold they can give more than the £3000 per annum then?

Hi OP
No. They can give away 3k each per tax year and if they have not given away anything last tax year they can give away 6k the first time for this and last tax year.  They can also give away as many 250 pound gifts to different people but please read up on that. You can give as many gifts of up to £250 to as many individuals as you want. Although not to anyone who has already received a gift of your whole £3,000 annual exemption. None of these gifts are subject to Inheritance Tax.
As another said, deprivation of assets. I worked with soc services a few years ago and they were hot on people chasing money for care home fees where it had been given away when the person gifting had a good idea they may have gone into a care home soon or a few years down the road.

Btw, IHT thresholds are increasing so you may want to look that up as well


ATB
x

What does 'hot on people' actually mean in practice?   Even if someone has deliberately deprived themselves of their assets, can the recipients of any such gifts be legally compelled to return the gifts?  

I don’t know about cash gifts, but my SIL was gifted the parental home, as the parents wanted to avoid any care costs.  When the last one of them had to go into a home, the council went to court, and put a charge on the gifted house, so they could claim the care costs back at some point.  I’m not sure of all the circumstances though.

kingle15216

Morglin said:

Mickey666 said:

sweetsand said:

kingle15216 said:

So because they won’t be above the IHT threshold they can give more than the £3000 per annum then?

Hi OP
No. They can give away 3k each per tax year and if they have not given away anything last tax year they can give away 6k the first time for this and last tax year.  They can also give away as many 250 pound gifts to different people but please read up on that. You can give as many gifts of up to £250 to as many individuals as you want. Although not to anyone who has already received a gift of your whole £3,000 annual exemption. None of these gifts are subject to Inheritance Tax.
As another said, deprivation of assets. I worked with soc services a few years ago and they were hot on people chasing money for care home fees where it had been given away when the person gifting had a good idea they may have gone into a care home soon or a few years down the road.

Btw, IHT thresholds are increasing so you may want to look that up as well


ATB
x

What does 'hot on people' actually mean in practice?   Even if someone has deliberately deprived themselves of their assets, can the recipients of any such gifts be legally compelled to return the gifts?  

I don’t know about cash gifts, but my SIL was gifted the parental home, as the parents wanted to avoid any care costs.  When the last one of them had to go into a home, the council went to court, and put a charge on the gifted house, so they could claim the care costs back at some point.  I’m not sure of all the circumstances though.

Thanks this is helpful although I believe the plan is for them to keep the home as theirs until both of them have passed away and then proceeds of the sale are to be split between their 3 children. 

What they have done is saved in an account for their 4 grandchildren with the money to be split 4 ways when they’re gone. They are in their early 80s and starting to worry about the amount they have (their aim was to have £10000 for each grandchild which they have exceeded)

They told me they don’t want to zero the account but they want to give each grandchild £8000 at Christmas which will leave them with enough savings just in case. We are all in our 20s/early 30s and could all use the money in different ways. But I just want to make sure it’s all above board.

(I have been talking to them about this for years btw they’ve only just decided)

I really hate the term ‘think they could need care in a few years’ - how the hell would you know? I could have a stroke tomorrow and need round the clock care, I’m 32! They are fit and healthy 80 year olds so apart from their age there’s no other reason they would!

Comms69

Literally give anyone any amount of cash or assets at any point. 

If they die with-in 7 years of said gift, it can attract IHT

If they need care with-in 7 years of the gift, council can count it as deprivation of assets. 

kingle15216

Comms69 said:

Literally give anyone any amount of cash or assets at any point. 

If they die with-in 7 years of said gift, it can attract IHT

If they need care with-in 7 years of the gift, council can count it as deprivation of assets. 

Can it count towards IHT even if the estate is well below the threshold?