Inheritance Tax on joint parent gift for house deposit

ace2dj

Hello.
My parents gave a £30,000 'gift' as part of my deposit for my first property 4-5 years ago. This was a joint gift and was documented as such.
Unfortunately my father died just recently (leaving everything to my mother), and we are in the middle of probate and need to figure out if I owe any inheritance tax for the joint gift given. I am aware of the taper relief over time, I am just not sure if I am meant to include all of the £30,000, half of the £30,000 (as it was a joint gift) or none of it as my mother is still with us. I don't want to ask the solicitor managing the probate for fear he'll go with the option that favours him the best.
Has anyone else experienced this, and if so what was the outcome?
Thank you so much in advance!

gettingtheresometime

I'm sorry for your loss.

Presumably your parents had to sign something to say that the money was being given to you as a gift so that would be a good indication as to whether all, half or none of it has to be considered for IHT purposes.

tbh I would have though it was imperative that the solicitor is made aware of the gift - after all he's not going to choose the option that suits him best, he's going to follow the law as to whether the estate has to pay any IHT.

Marcon

ace2dj said:

Hello.
My parents gave a £30,000 'gift' as part of my deposit for my first property 4-5 years ago. This was a joint gift and was documented as such.
Unfortunately my father died just recently (leaving everything to my mother), and we are in the middle of probate and need to figure out if I owe any inheritance tax for the joint gift given. I am aware of the taper relief over time, I am just not sure if I am meant to include all of the £30,000, half of the £30,000 (as it was a joint gift) or none of it as my mother is still with us. I don't want to ask the solicitor managing the probate for fear he'll go with the option that favours him the best.
Has anyone else experienced this, and if so what was the outcome?
Thank you so much in advance!

There is no 'best option' for the solicitor managing probate, nor could he be selective about the route to follow even if there were. 

If your father left everything to your mother, then no IHT will be payable, although any outstanding 'untapered' part of his £15,000 gift will use up part of his IHT allowance of £325K. Some of the original £15K may have been allowable under the annual gifts allowance, so we are likely to be talking about very small amounts.

It's important to let the solicitor know the details, including exactly when the gift was made, so that when your mother dies the correct amount of your father's unused allowance can come into play.

Keep_pedalling

If IHT was due it would come out of his is remaining estate not from you. However, in this case there will be no IHT. As you father has left everything to your mother it is exempt from IHT. Gifts given in the last 7 years would only be subject to IHT if the total given exceeded his nil rate band (£325,000), so the if this was the only gift he gave then he would have only used up a tiny amount of his NRB.

This is only of import when it comes to your mother’s estate as it will effect the amount of NRB that can be transferred to her estate. Some of the £15k will also be exempt if he made no other gifts as we all get £3000 annual exemption on gifts, and if if he made no gifts in the previous year that doubles up to £6000.

Forget tapper relief that only applies for gifts in excess of the NRB and only then on the portion of the gift exceeding it.

thegreenone

As your mother has employed a solicitor to do Probate, let he/she do their job.  You have to tell them everything for the submission to HMRC and Probate and your mother will need to swear an oath (I think it's on paper now, waiting for this myself).  

Marcon

Mickey666 said:

The solicitor is likely to cost far more than the IHT liability (if any)

Much cheaper to do it properly now than retrospectively try and sort things out when the second parent dies.