Gift query

Kirkmain

My dad is very ill and is likely going to die within 12 months. Last year he gifted my sister and I, £100,000 each to buy our houses. The money was gifted by him, from his bank account. I know people will say if is under the threshold and exempt we will not need to pay but we are still using up £200k of the tax free inheritance quota.

But could we not say the money was gifted by mum and dad, who are married? And as long as, God willing, mum survives another 6 years, the gift will be gifts and exempt from using up the inheritance threshold. It seems like a silly technicaility because it would have been very easy for dad to transfer the money into my parents joint bank account and then for the two of them to sign the gift notification for the houses. but we did not do that. But could we not say the money came from mum as well, as she would have inherited the money anyway, tax free, on dad's death.

Thanks in advance. Sorry if it seems cold to be worrying about this at this time. But I have grieved and now just stressing about the unfairness that our family will be finanicilly penalised because my dad has the audacity to not live and enjoy a longer life.

Keep_pedalling

Sorry, but that would be tax evasion, it would have been better had it been made as joint gift or, if he knew he was seriously ill, to gift it to your mother first which would have taken it all out of his estate, but that can’t be changed retrospectively.

Assuming your mother owns a house and it is worth at least £350k then her total estate would need to exceed £800k before this actually became an issue, but if that is the case she could make similar similar gifts to get the value of her her estate nearer or below that value. This should only be done if it doe# not leave most of her estate tied up in her house, as being asset rich and cash poor is no fun in your latter years.

Kirkmain

Keep_pedalling said:

Sorry, but that would be tax evasion, it would have been better had it been made as joint gift or, if he knew he was seriously ill, to gift it to your mother first which would have taken it all out of his estate, but that can’t be changed retrospectively.

Assuming your mother owns a house and it is worth at least £350k then her total estate would need to exceed £800k before this actually became an issue, but if that is the case she could make similar similar gifts to get the value of her her estate nearer or below that value. This should only be done if it doe# not leave most of her estate tied up in her house, as being asset rich and cash poor is no fun in your latter years.

Thanks. Is what I feared. no he had no idea that he was ill and may die within 7 years.

Is the threshold not £1million? Dad's basic allowance plus main home allowance (total £500,000) can be transferred to mum's £500,000 allowance?

RAS

The limit is £1m but dad has already used up £200k by gifting money to you within 7 years of death, so his estate can't transfer the full amount for use by your mother's executors.

Keep_pedalling

RAS said:

The limit is £1m but dad has already used up £200k by gifting money to you within 7 years of death, so his estate can't transfer the full amount for use by your mother's executors.

If your father made no other gifts in addition to theses large ones and normal birthday and Christmas gifts) then £3000 of this is exempt and if he made no gifts in the previous financial year that can carried forward as well which would reduced the used NRB to £194k.