Inheritance tax allowances

emmaj1045

To hop on and ask a further question, if I gift, say £300k to each of my children, would only the firs5 £325k not have taper relief, or would there also be the additional £175k allowance for the house?

lisyloo

Keep_pedalling said:

lisyloo said:

Keep_pedalling said:

lisyloo said:

If it's going to go to them anyway and you don't need to money, then you are better off gifting it as early as possible if your estate is going to fall outside the inheritance tax thresholds (if you're single £325K, if they are your kids £500K).

Inheritance tax works like this

0-3 years 40%
3-4 years 32%
4-5 years 24%
5-6 years 16%
6-7 years 8%
7 or more 0%

If your entire estate is likely to be less than £325K then you don't need to worry about it.
If you have money they will get anyway then logic says, give it to them as early as possible to reduce the bill (records will help them when the time comes).

The way I read the rules you cannot use the £250 in addition to the £3K/£6K on the same person.

How Inheritance Tax works: thresholds, rules and allowances: Rules on giving gifts - GOV.UK

If you're my mum, then thanks very much mum 

It only works like that if you gift over your NRB, taper relief does not apply to the first £325k of gifts.

So just to be clear if they are in the Nil rate band, are they Nil?

Not sure I understand your question, but to clarify, if I make a gift of £325 that gift remains in my estate for 7 years so if I die 6 years and 364 days later, it will still have used up my entire NRB. If that gift had been £425k taper relief would apply to the additional £100k provided I live for at least 3 years. 

So if gifts are made that exceed the £3K allowance, they are still inside the estate.
But if the estate (including gifts) is below £325K then there is no inheritance tax to pay?

So taper relief doesn't apply below the nil rate band but we don't really care as there's no inheritance tax to pay?

Have I got that right?

Albermarle

lisyloo said:

Keep_pedalling said:

lisyloo said:

Keep_pedalling said:

lisyloo said:

If it's going to go to them anyway and you don't need to money, then you are better off gifting it as early as possible if your estate is going to fall outside the inheritance tax thresholds (if you're single £325K, if they are your kids £500K).

Inheritance tax works like this

0-3 years 40%
3-4 years 32%
4-5 years 24%
5-6 years 16%
6-7 years 8%
7 or more 0%

If your entire estate is likely to be less than £325K then you don't need to worry about it.
If you have money they will get anyway then logic says, give it to them as early as possible to reduce the bill (records will help them when the time comes).

The way I read the rules you cannot use the £250 in addition to the £3K/£6K on the same person.

How Inheritance Tax works: thresholds, rules and allowances: Rules on giving gifts - GOV.UK

If you're my mum, then thanks very much mum 

It only works like that if you gift over your NRB, taper relief does not apply to the first £325k of gifts.

So just to be clear if they are in the Nil rate band, are they Nil?

Not sure I understand your question, but to clarify, if I make a gift of £325 that gift remains in my estate for 7 years so if I die 6 years and 364 days later, it will still have used up my entire NRB. If that gift had been £425k taper relief would apply to the additional £100k provided I live for at least 3 years. 

So if gifts are made that exceed the £3K allowance, they are still inside the estate. ( for 7 years yes)
But if the estate (including gifts) is below £325K then there is no inheritance tax to pay? ( correct, the limit can be more than £325K , if it is the second death of a married couple for example) 

So taper relief doesn't apply below the nil rate band but we don't really care as there's no inheritance tax to pay? Correct nothing to worry about .

Have I got that right?

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