Inheritance Tax

Spider777

Inheritance tax and gifts given away within the 7 years prior to death - is it just gifts that are given to an individual that need to be declared as gifts received? What about a loan to a Ltd company? My sister had a Ltd Company, my Father made a loan directly to her company, this wasn't repaid as the company went into administration shortly afterwards. My Father passed away within the 7 years of the loan. Is this a gift to be included on the IHT400 form, or is it not applicable in this case?

noh

It was not a gift.
It was a loan therefore it is an asset of the estate. It may have zero value.
When your sisters company went into administration was there any pay out to creditors?

Spider777

No, there wasn't any funds available to pay the creditors. 

noh

It's an asset of the estate but has zero value therefore doesn't need to be included on the IHT form.

Spider777

That's what I thought too, many thanks for your assistance

Keep_pedalling

Even though it now has zero value you need to provide the details on supplementary form IHT416. Proof is required that this was a loan gone bad and not a gift.

SeniorSam

The rule about gifts only applies to estates that are likely to be valued in excess of the nil rate band for inheritance (£325,000 )  It sound like her estate was no even close to this so perhaps easier to chat with the tax office and you may find it easier to deal with

Keep_pedalling

SeniorSam said:

The rule about gifts only applies to estates that are likely to be valued in excess of the nil rate band for inheritance (£325,000 )  It sound like her estate was no even close to this so perhaps easier to chat with the tax office and you may find it easier to deal with

The OP has not mentioned the value of the estate, but as they are already working on IHT 400 it sounds like the estate is above the NRB. 

This is also the OPs father’s estate not his / her sister’s.

Spider777

My Father would also benefit from the unused transferrable NRB, transferred over from my Mothers IHT allowance, as she passed away 3 years previous. There was 100% unused allowance from this time, so a total of £650,000 allowance at the time of my Father's passing would apply. 

getmore4less

What about residential NRB?  potentially another £350k there

Spider777

getmore4less said:

What about residential NRB?  potentially another £350k there

Yes, but no property was owned by my Father when he passed away, so it would just be the 650k I believe.