Gifted deposit - single or joint account query

My_perfect_cousin

Married parents want to make a gifted deposit to child and fiancee to help them buy their first house. Parents do not have a joint account. One parent is higher tax payer; one is standard rate. Parents manage finances so that their taxable savings are held by lower tax payer. The lower tax payer parent has therefore got the funds available to make the gifted deposit. The higher tax payer has ISAs but not other savings. The higher tax payer could use ISA savings but would prefer not to do so.

1. If the gifted deposit is made by the one lower tax payer parent from their savings only.  And if the lower tax payer/ gifting parent dies within 7 years, then the entire gift is subject to inheritance tax. If higher tax payer parent dies within the 7 years; no impact of inheritance tax. Is this correct?

2. If the two parents set up a joint current account and the lower tax payer parent transfers the sum of the gifted deposit into it.  It becomes joint funds. And then the gifted deposit is made from that account. And if the either parent dies within 7 years, then only half of the gift is subject to inheritance tax. Is this correct? (assumes that only one parent dies with the 7 years)

Timings-wise. The young couple have had offer accepted, have solicitor and are beginning mortgage process.

Assuming that the joint account is a wise move.

3. Should the parents set up the joint account with minimal balance and wait until the gift deposit is required before the lower tax payer transfers funds to the joint account?

4.  Or Should the parents set up the joint account asap and the lower tax payer transfer the funds for the gifted deposit asap?

The parents are cautious, careful and keen to be entirely compliant with all relevant requirements. They would ensure that the solicitor and mortgage provider is aware of the above. 

many thanks for any advice etc

amnblog

The person whose account is supplying the funds is making the gift.

There is no reason to set up any new bank accounts.

MaryNB

When the solicitor checks the source of the funds they will go back at least a few months. At this stage of the couple's buying process, if the money is moved into any kind of account, the solicitor will ask where it came from originally which by the sounds of it will be the lower rate tax payer. 

Thrugelmir

What's the size of the potential deposit ? To give the matter some context. 

Keep_pedalling

What makes you think any of it will be subject to IHT? It might use up some of your parents NRB but unless this is a really large gift exceeding the NRB it is not going to attract IHT, and even if it did that would come from the residual estate you would not be having to pay it yourselves.

For a joint gift why can’t they just send equal amounts from their own accounts?