Gifts from parents/grandparents

cjbchris

If a parent / grandparent wishes to gift money above the £3000 allowance, does this need to be declared to HMRC? Or only if the person passes away before the end of the seven year tapering period?

Rodders53

cjbchris said:

If a parent / grandparent wishes to gift money above the £3000 allowance, does this need to be declared to HMRC? Or only if the person passes away before the end of the seven year tapering period?

The latter and then only if the gift (or gifts) would make the estate over the nil rate band applicable at time of death.

https://www.gov.uk/inheritance-tax/gifts

Keeping records of such gifts for the future Executors would be a good idea.

Jeremy535897

For the information HMRC might require in the event that there is an amount chargeable to inheritance tax, see:
https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/917890/IHT403-05-20.pdf

If the donors have surplus income and wish to make regular gifts, the normal expenditure out of income exemption can be useful. See:https://www.gov.uk/hmrc-internal-manuals/inheritance-tax-manual/ihtm14231

MikeJXE

A interesting question I never gave a thought to at Christmas 2021 

I'm 82 and don't need £150,000 so 

I gave my 2 kids and 4 grandkids £10,000 each 

sheramber

MikeJXE said:

A interesting question I never gave a thought to at Christmas 2021 

I'm 82 and don't need £150,000 so 

I gave my 2 kids and 4 grandkids £10,000 each 

Will your estate be liable for Inheritance Tax?

Grumpy_chap

MikeJXE said:

A interesting question I never gave a thought to at Christmas 2021 

That is actually the entirely correct approach.

The number of threads where people reference limiting gifts to the IHT exemptions is rather perplexing.  If you are in the fortunate position to be able to gift more generously, then making the gift can never result in more IHT than not making the gift.  Assuming that the individual's estate is and is likely to remain in IHT territory, then not gifting the money is the guaranteed way to ensure that IHT will become due.

The more complex matter is the one around deprivation of assets and ability to fund care fees should the need arise.  Again, I suspect in reality, those able to make gifts exceeding the IHT exceptions are sufficiently financially robust as to be retaining sufficient for foreseeable needs and also take into account what is likely to be an above-average retirement income.

For most cases, an individual having £150k liquid assets and gifting £60k is still retaining sufficient to fund adequate care needs, especially once ongoing income and sale of property (if any) are considered.

MikeJXE

sheramber said:

MikeJXE said:

A interesting question I never gave a thought to at Christmas 2021 

I'm 82 and don't need £150,000 so 

I gave my 2 kids and 4 grandkids £10,000 each 

Will your estate be liable for Inheritance Tax?

No and to be honest I wouldn't be concerned if it did

Everyone is going through a rough time at present and If I am ok and don't need all I have I will share it 

As regards deprivation of assets thats another story only time will tell 

None of us know whats in our future, I could die tomorrow or in 10/20 years. My brother saved for his big pension for when he retired at 65, he died at 65 and 1 month  

My wealthy friend is clutching on to his pensions, investments and savings to leave to his grandchildren that won't need it as they are wealthy already. I think even he is about to do an about turn after he said I was crazy.

People who leave inheritance to their offspring and relatives will never get the joy I got 

That is to see the emotions and look on their faces 

Albermarle

The number of threads where people reference limiting gifts to the IHT exemptions is rather perplexing.

It is not just the threads on here, I know people personally who have the same misconception, that somehow by gifting more than £3K they will end up paying more tax.

I think it is partly that the media articles on the subject, tend to be written in a kind of dramatic way eg ' You must give away £3k pa to avoid tax grab by government' but they never make it very clear that you can actually give away a lot more, and never increase your potential IHT liability, and quite possibly reduce it.

It actually surprises me how many people seem to even know about the £3k, considering the very low level of personal finance knowledge generally. Same as with carry forward in relation to pension contributions. A relatively obscure rule that seems to be known quite widely, although 90%+ also completely misunderstand this rule as well.

p00hsticks

MikeJXE said:

sheramber said:

MikeJXE said:

A interesting question I never gave a thought to at Christmas 2021 

I'm 82 and don't need £150,000 so 

I gave my 2 kids and 4 grandkids £10,000 each 

Will your estate be liable for Inheritance Tax?

No and to be honest I wouldn't be concerned if it did

Of course you won't - you'll be six foot under !

But it will be of great help to those who have to sort out your estate if you have ensured that any gifts you make are documented (who you have gifted, how much and when) so that your executor is aware of them without having to ask personal questions to grieving relatives .....