IHT tax on gifts

eezyrider

Sorry to revisit this but I have researched a lot and got conflicting answers.

The deceased has estate valued at more than £325k and has left it to his 4 children. During the last 2 years or so he has made 2 gifts each to 3 of his children of around £10k per time i.e. £60k total. The 4 th child is not concerned as he received his share before the 7 years. A granddaughter also received a wedding gift of £5k (not £2.5k).

Who is responsible for IHT on these gifts, is it the recipients or the estate?

Thanks for any info.

HappyHarry

The estate.

The gifts that are in excess of the £3,000 annual gift allowance (plus one year carry back) and the £250 allowance   and the 'regular gifts from income' allowance and the wedding allowance will reduce the deceased's available Nil Rate Band.

Are the executors able to claim a Residence Nil Rate Band or a deceased spouse's NRB or RNRB?

n.b. edited a couple of times to add in the additional allowances that might be available.

GrumpyDil

Does the estate also include any property which is being left to his children.and if so have you factored that allowance into the calculation? 

eezyrider

There is no property involved just cash at bank, and no spouse as he was divorced about 30 years ago

Keep_pedalling

The IHT comes out of the residual estate before the distribution to the beneficiaries.

Keep_pedalling

eezyrider said:

There is no property involved just cash at bank, and no spouse as he was divorced about 30 years ago

Did he previously own a home? The RNRB can still be claimed if someone sold up to move in with family, rented accommodation or to residential care.

eezyrider

Keep_pedalling said:

eezyrider said:

There is no property involved just cash at bank, and no spouse as he was divorced about 30 years ago

Did he previously own a home? The RNRB can still be claimed if someone sold up to move in with family, rented accommodation or to residential care.

He was living in rented accommodation having sold his combined business/residential premises about 2 years ago 

Keep_pedalling

eezyrider said:

Keep_pedalling said:

eezyrider said:

There is no property involved just cash at bank, and no spouse as he was divorced about 30 years ago

Did he previously own a home? The RNRB can still be claimed if someone sold up to move in with family, rented accommodation or to residential care.

He was living in rented accommodation having sold his combined business/residential premises about 2 years ago 

Then the downsizing rule should apply. 

https://www.gov.uk/guidance/how-downsizing-selling-or-gifting-a-home-affects-the-additional-inheritance-tax-threshold

eezyrider

Keep_pedalling said:

eezyrider said:

Keep_pedalling said:

eezyrider said:

There is no property involved just cash at bank, and no spouse as he was divorced about 30 years ago

Did he previously own a home? The RNRB can still be claimed if someone sold up to move in with family, rented accommodation or to residential care.

He was living in rented accommodation having sold his combined business/residential premises about 2 years ago 

Then the downsizing rule should apply. 

https://www.gov.uk/guidance/how-downsizing-selling-or-gifting-a-home-affects-the-additional-inheritance-tax-threshold

Thanks. Had a quick glance and that looks a bit complicated for my tired old brain. Will have to take advice

Keep_pedalling

Have a look at IHT 435 question 15 to see what is required from the executor.

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/1183087/IHT435-2023.pdf

eezyrider

So in this case Deceased rents out his home/business and moves into rented accommodation. He sells his property to his tenant in 2021 and receives £451k on completion.

Are we saying the executors can claim £175k RNRB thereby taking his IHT threshold to £500k in which case no tax is due?

Really appreciate all the advice from everyone so far. Thank you.