Inheritance tax question

Rosegoldflame

Hi all, newbie here. I am wanting to know if anyone can confirm that the 325000 IHT free allowance also applies if inheritance is gifted early? I know there are rules about 3000 per year allowed  to be gifted and also the sliding scale of 1- 7 years with extra gifts above that.

But if the estate is worth £325000, and therefore within that IHT free amoung, but the house is sold early and distrubuted, does this go under the tax free  rule,  or is  it treated as a gift, and subject  to the 1-7 year reducing scale? My common sense tells me it should be the former, but would love any further input, thank you

p00hsticks

Your post is a bit confusing (at least to me). 
Are you saying that there is an estate of someone still living that is worth worth £325,000 including a house ?
My understanding is that if they sold the house and gave the proceeds away but then died within 7 years then the value gets added back into their estate for IHT calculation purposes. But there would be no inheritance tax to pay as the remaining estate + gift is under the IHT allowance. 

The 'reducing scale' (taper relief) only applies if the value of the gift is over the IHT allowance, which is not the case here. 

Keep_pedalling

Any gifts not covered by exemptions, such as the £3k annual exemption, are subject to the 7 year rule, so if I gift £300k today but die 6 years later that £300k is still part of my estate for IHT  purposes (taper relief only applies if you gift more than your NRB, and only applied to the amount over that value (£325k).

Unless this person had plenty of other assets available selling your home and giving all the proceeds away would be a very foolish thing to do and would be treated as deliberate deprivation of assets as far as benefits and care costs are concerned.

Albermarle

 and also the sliding scale of 1- 7 years with extra gifts above that.

There is a a lot of misunderstanding about taper relief/sliding scale in this situation.
It only applies in certain circumstances and not in the case you describe.
Any gift ( apart from the £3K) will be 100% counted back into the estate, if the giver dies within 7 years.