Inheritance query

My mother has been left £47.5k in a will and she has kindly advised us that she wants to gift £10k to our son (19 years of age and at UNI) and £10k to us.
I thought that she could only gift 3k a year or am I incorrect?
Is there a way she could gift the 10k without being taxed?

Many thanks


  • Ayr_Rage
    Ayr_Rage Posts: 820
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    edited 30 September 2023 at 12:46PM
    You can give away as much as you want, nobody will be taxed on the gifts.

    It will only be taken into account for Inheritance Tax if your mother passes within 7 years of giving the gifts and only then if her estate is over the prevailing IHT limit. 

    Have a look here
  • You are incorrect the £3000 is an annual IHT exemption not a limit.

    We don’t have a gift tax in this country so the gifts are not subject to tax. Gifts over £3k remain in her estate for 7 years for IHT purposes but unless her net worth is actually in IHT territory this won’t matter. If her estate is likely to be subject to IHT then should could make a deed of variation which effectively avoids the 7 year rule. 
  • Another factor which may or may not be relevant is potential deprivation of assets, if she is claiming or needs to claim benefits in the future, the gifts could be seen as getting rid of money in order to claim. Or if she is likely to go into ca care home or have carers coming in, but without knowing her circumstances it is not possible to say if this is relevant.
  • Out of interest, if my bachelor uncle who died and left his money to myself and my two siblings and paid IHT had gifted one of his friends 20k five years previously, how would anyone know about it?  Is one expected to notify the would be executor when making such gifts?  Seems open to abuse IMO.
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  • Albermarle
    Albermarle Posts: 21,141
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    Is one expected to notify the would be executor when making such gifts?
    Yes or at least leave a record for the executor to see.
     Seems open to abuse IMO.
    No doubt not all gifts are properly recorded. 

    I thought that she could only gift 3k a year or am I incorrect?
    You are incorrect but not alone. From many posts on here it seems the majority of the population is labouring under this misunderstanding.

  • ebc
    ebc Posts: 151
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    She could use a Deed of Variation to redirect part of her inheritance to you and your son. It is then treated as though the original will was worded to leave 10K each to you and your son, and your mother retains the rest that she inherited. 
    This way the [10K + 10K] is deemed to have not been part of your mother's estate so the 7-year gift check would not apply.
    NB the Deed of Variation must be done within 2 years of the original death.
    Worth talking to a solicitor about it.
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