IHT403 (Gifts)

DancingBadger

My understanding of cash gifts is where an estate falls into IHT territory and the gifts are not exempt, the IHT falling due is paid out of the estate.  However, IHT403 contains this statement:

If Inheritance Tax is due on any of the gifts, the people who received them are liable to pay the tax due on them. This is separate from the Inheritance Tax that may be due on the estate.

What have I misunderstood; could someone explain this please?

DippySkippy

I think if you declare them on the forms then the estate pays - but if they are not declared but turn up later the receiver pays

Keep_pedalling

Yes, it is rather confusing but unless the cash gifting exceeds £325k then the estate is responsible for paying the IHT, but I can’t really explain why it is worded like this. 

DancingBadger

Keep_pedalling said:

Yes, it is rather confusing but unless the cash gifting exceeds £325k then the estate is responsible for paying the IHT, but I can’t really explain why it is worded like this. 

Thank you for confirming.  I've been ploughing through IHT400 and the requisite schedules all afternoon and was already slightly cross-eyed when I came across that gem.

dales1

https://www.gov.uk/guidance/work-out-inheritance-tax-due-on-gifts

If tax is due on gifts

Inheritance Tax is only due if the person who died gave away more than £325,000 in gifts in the 7 years before they died. In this situation, the person who gets a gift in these last 7 years will have to pay the Tax.

Gifts use up the £325,000 tax free allowance first. Any unused threshold left after this can be used by the estate of the person who died.