IHT and life time gifts

Sterlingtimes

Which of these are taxable are potentially taxable in the future?

A father and a mother each give their only child £3,000 in a tax year.

A child lives in his parents' home without rent.

A child is fed by parents whilst living in their home, i.e. free groceries.

A child living in his own home visits his parents' home and helps himself to groceries.

A father and mother paint their child's home without charge.

A father and mother pay another person to paint their child's home without passing the cost onto their child.

A father and mother tell their child: "You can use our car whenever you wish. It will always be full of petrol". 

Each year, the child's father and mother give a family silver gift for Christmas.

Keep_pedalling

None of them.

[Deleted User]

Keep_pedalling said:

None of them.

Seconded! 

eskbanker

Sterlingtimes said:

Which of these are taxable are potentially taxable in the future?

All of them.

(if tax legislation changes....)

TheGreenFrog

Possibly the first and the last (depending on various things like value, other gifts made, reason for the gift, surplus income position of parents etc).  is this a quiz?!

Albermarle

You could also add
Paying for adult child to come on holiday with you.

In fact it is an interesting post/question, as you could strictly interpret some of these items as gifts that could affect an eventual IHT calculation ( which I presume was the reason for the OP) . However the experts seem to think that HMRC would not pursue these type of gifts. Maybe because identifying/quantifying them would be pretty tricky.

Sterlingtimes

TheGreenFrog said:

Possibly the first and the last (depending on various things like value, other gifts made, reason for the gift, surplus income position of parents etc).  is this a quiz?!

Thank you. It could be a quiz, but I am seriously trying to understand the boundaries. A child who benefits in the manner I describe can accumulate his income better

Sterlingtimes

Albermarle said:

You could also add
Paying for adult child to come on holiday with you.

In fact it is an interesting post/question, as you could strictly interpret some of these items as gifts that could affect an eventual IHT calculation ( which I presume was the reason for the OP) . However the experts seem to think that HMRC would not pursue these type of gifts. Maybe because identifying/quantifying them would be pretty tricky.

You understand my reason for posting. Thank you so much for responding.

Could I add a more specific scenario, please?

A child who has lived with his parents for many years buys his own house. The surveyor identifies numerous issues that need correction, e.g. windows, doors, electrics, roofing. The parents commission a builder to perform all remedial work and say to the builder, "Please invoice us." Is that a gift based on the questions already answered?

Sterlingtimes

TheGreenFrog said:

In theory to be a PET the estate of the recipient has to increase in value as a result of the gift (so a gift of shares does increase the value of the recipient's estate, but paying the hairdresser to cut your child's hair doesn't.  Giving money to a child to pay for their haircut does, as the gift is the cash not the haircut).  But aside from that there are exemptions for maintenance of dependents, normal expenditure out of income and annual aggregate and per person monetary exemptions.  

This is very helpful. So, paying a builder for repairs on my son's house would, similar to the haircut, not involve a cash gift. Now the defective doors and windows became good doors and windows and the defective distribution board becomes a good, fully tested distribution board and so on (just as the bad hair becomes good hair). However, the property's material valve has not been increased. This then falls outside the IHT formula.

TheGreenFrog

The theory is complicated - having given your post more thought in theory most of the gifts could in the right circumstances be chargeable (some on death within seven years and some potentially sooner if sufficiently large).  Safest is to stay within the exemptions (eg annual monetary, normal expenditure out of income, maintenance of a dependent).

TheGreenFrog

Sterlingtimes said:

TheGreenFrog said:

In theory to be a PET the estate of the recipient has to increase in value as a result of the gift (so a gift of shares does increase the value of the recipient's estate, but paying the hairdresser to cut your child's hair doesn't.  Giving money to a child to pay for their haircut does, as the gift is the cash not the haircut).  But aside from that there are exemptions for maintenance of dependents, normal expenditure out of income and annual aggregate and per person monetary exemptions.  

This is very helpful. So, paying a builder for repairs on my son's house would, similar to the haircut, not involve a cash gift. Now the defective doors and windows became good doors and windows and the defective distribution board becomes a good, fully tested distribution board and so on (just as the bad hair becomes good hair). However, the property's material valve has not been increased. This then falls outside the IHT formula.

Unfortunately that post was correct but misleading so I deleted it, but evidently not quickly enough!  In those circumstances the "gift" is not a PET but is a chargeable lifetime transfer which can catch you for IHT in a different way.