Gifting money

BjBland

So my mum has come into a large inheritance and would like to gift my brother and I 20k each and then would like to give me 8k for my wedding this year.
The topic has just come up about gift tax? We had no idea and now are worried about how to go about this with the least amount of tax, especially considering they have already paid a large inheritence tax as well! 
Any help would be really appreciated

Thank you 

kaMelo

There is no gift tax in the UK, she is free to give whatever she wishes to whoever she wishes.

Ayr_Rage

There could be inheritance tax implications in the future depending on the value of you mum's estate when she passes.

Certain gifts are exempt, read this.

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

BjBland

Oh so does this mean that we will only be taxed on the gift if she passes away in the next 7 years? That makes more sense! 

Keep_pedalling

If the inheritance puts your mother’s estate into IHT territory then it would be best to do this via a deed of variation, which effectively passes the gift straight from the estate and bypasses the 7 year rule. This needs to be done within 2 years of the death of the testator.

A parent can make an IHT exempt gift if up to £10k in contemplation of marriage so that will drop out her estate immediately. 

xylophone

https://www.gov.uk/alter-a-will-after-a-death

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

aroominyork

Keep_pedalling said:

If the inheritance puts your mother’s estate into IHT territory then it would be best to do this via a deed of variation, which effectively passes the gift straight from the estate and bypasses the 7 year rule. This needs to be done within 2 years of the death of the testator.

Just to explain this a little more (because it can be useful for folk to know), a Deed of Variation (DoV) changes the way an estate is distributed so long as the people who would receive less agree to it. Last year me and my sister (we were executors and residuary beneficiaries) wanted to vary the terms of our late father's Will. By increasing the amount left to charity from 9.xx% to 10%, the rate of IHT was redcued from 40% to 36%; this meant she, me and the charity would all benefit. Curiously, my father's solicitor did not know how to draft a DoV and wanted to get a barrister to do it which would have cost a couple of thousand. Instead, we found another solicitor to do it (about £600).

But I have a question others might be able to answer. If a beneficiary wants a DoV but the executor is not cooperative ("this is the Will - I can't be bothered to mess with it") can anything be done without the executor's cooperation?

Grumpy_chap

aroominyork said:

But I have a question others might be able to answer. If a beneficiary wants a DoV but the executor is not cooperative ("this is the Will - I can't be bothered to mess with it") can anything be done without the executor's cooperation?

I can't give a definitive legal answer, but my FiL had this situation.
When FiL's mother died, FiL and his sister were joint Executors.
FiL and his sister were the only two beneficiaries, half each.
All very simple.
FiL wanted a DoV so that some of his inheritance would go to a third party without ever passing as part of his Estate, so never at risk of IHT liability.
FiL's sister kicked up a right stink and refused with lots of derogatory comment about disrespecting the mother etc.  In the interests of a peaceful life, FiL did not pursue the DoV beyond a certain point and simply re-gifted once the inheritance was distributed.

The DoV did not need permission from FiL's sister in capacity a beneficiary as she was not negatively impacted in that regard.
Whether the sister had right as joint-Executor to block it, or simply creating a fuss beyond her station, I cannot say for certain.
Sometimes, the rules and the reality may not align.

xylophone

The DoV did not need permission from FiL's sister in capacity a beneficiary as she was not negatively impacted in that regard.
Whether the sister had right as joint-Executor to block it, or simply creating a fuss beyond her station, I cannot say for certain.
Sometimes, the rules and the reality may not align.

See gov link above.

What you need to do

To change a will you’ll need to make a ‘variation’.

You don’t need a formal document or deed - you can write a letter as long as it meets these conditions.

If the variation means there’s more Inheritance Tax to pay, you must send a copy to HM Revenue and Customs (HMRC) within 6 months of making it.

You don’t need to send a copy to HMRC if the variation doesn’t change the amount of Inheritance Tax due.

Keep_pedalling

aroominyork said:

Keep_pedalling said:

If the inheritance puts your mother’s estate into IHT territory then it would be best to do this via a deed of variation, which effectively passes the gift straight from the estate and bypasses the 7 year rule. This needs to be done within 2 years of the death of the testator.

But I have a question others might be able to answer. If a beneficiary wants a DoV but the executor is not cooperative ("this is the Will - I can't be bothered to mess with it") can anything be done without the executor's cooperation?

A DOV is made by the beneficiaries, the executor does not need to be involved.