Cash to kids 7yr HMRC rule - which parent?

Random47

Quick Question

If you want to give kids cash for say house purchase / deposit (or even sign over own property to them) and the 7 year HMRC rule applies, i.e., no tax if the parent lives for at least 7 years after cash / equity transfer.
Which parent should do this if its a joint account.
I am 10 years older than wife, so on longevity it makes sense wife does this, but if joint account what rules applies. Won't likely happen for another 10-15 years in any event, just would be good to understand current regs.
Thanks

Marcon

Random47 said:

Quick Question

If you want to give kids cash for say house purchase / deposit (or even sign over own property to them) and the 7 year HMRC rule applies, i.e., no tax if the parent lives for at least 7 years after cash / equity transfer.
Which parent should do this if its a joint account.
I am 10 years older than wife, so on longevity it makes sense wife does this, but if joint account what rules applies. Won't likely happen for another 10-15 years in any event, just would be good to understand current regs.
Thanks

If it's a joint account you are each deemed to have given half the gift.

dunstonh

and in respect of your house, it would never become a PET whilst you still live in it.   For it to qualify as a PET you must cease to retain any benefit from it.

Random47

dunstonh said:

and in respect of your house, it would never become a PET whilst you still live in it.   For it to qualify as a PET you must cease to retain any benefit from it.

It will need to be a downsizing then  

pip895

Random47 said:

Quick Question

Which parent should do this if its a joint account.
I am 10 years older than wife, so on longevity it makes sense wife does this, but if joint account what rules applies. Won't likely happen for another 10-15 years in any event, just would be good to understand current regs.
Thanks

It is easy enough to transfer it into an account in your wife’s name prior to transferring to the kids - particularly if it’s likely to be at some years away.

Keep_pedalling

Random47 said:

dunstonh said:

and in respect of your house, it would never become a PET whilst you still live in it.   For it to qualify as a PET you must cease to retain any benefit from it.

It will need to be a downsizing then  

Sounds like most of your estate is tied up in your home, so unless it is a £1M+ home the IHT is not likely to be an issue.

if your joint assets are well below £1M then it does not matter if the gifts are made jointly as no IHT will be due on the first death anyway. If that is not the case then it might be worth the younger if you provide the bulk of the gift, but be careful not to exceed her NRB as that could lead to IHT being due if she died first. 

Albermarle

As above , these rules about gifts  are only relevant if your estate(s) will be liable for Inheritance Tax.

sheslookinhot

Can any of these payments be retrospective say  the previous tax year ?

Secret2ndAccount

sheslookinhot said:

Can any of these payments be retrospective say  the previous tax year ?

If by 'these payments' you mean gifts, the answer is no. Here is the only slightly retrospective element:
You can gift 3k per tax year to anyone, or split between several people, without attracting or potentially attracting IHT. If you don't use your annual allowance, you can carry it forward one year. So you could gift 6k every two years, or anywhere in between.

jamesd

sheslookinhot said:

Can any of these payments be retrospective say  the previous tax year ?

Yes, gifts out of income can be for several prior years provided the money has clearly been set aside in some way to illustrate that it was not needed for spending, for example an accumulation of excess. Note that HMRC is likely to contest this and what I've described is a summary of case law. When saved unspent income becomes capital is an area of doubt, as is the treatment of income drawdown which is in effect drawing income from capital.