36% IHT rate

aroominyork

I'm not suggesting we want to lose residential relief - I'm just ensuring I understand the outcomes of different situations, which I do now. This has been very helpful. 

aroominyork

Albermarle said:

Just to reinforce one of the comments above, as it is a common misunderstanding.
Taper relief only applies on very large gifts that exceed the nil rate band.

As a simple example - A Single person dies, just with the £325 K nil rate band.
If they gave away say £100K 6 years before dying, the full £100K is counted back into the estate.

However if they gave away say £450K, 6 years before dying. £325K would be counted back into the estate and £125K would benefit from taper relief. 

I'm not sure the point about taper relief can be mentioned too many times - as you say, it is commonly misunderstood. The penny finally dropped for me from this AI-generated (sorry...) Google answer mentioning that HMRC treats gifts chronologically. 

So for gifts under £325k there is no taper relief - it is all taxed at 40% - until midnight on the day seven years after the gift is made, at which strike of the clock no tax becomes due. 

Albermarle

aroominyork said:

Albermarle said:

Just to reinforce one of the comments above, as it is a common misunderstanding.
Taper relief only applies on very large gifts that exceed the nil rate band.

As a simple example - A Single person dies, just with the £325 K nil rate band.
If they gave away say £100K 6 years before dying, the full £100K is counted back into the estate.

However if they gave away say £450K, 6 years before dying. £325K would be counted back into the estate and £125K would benefit from taper relief. 

I'm not sure the point about taper relief can be mentioned too many times - as you say, it is commonly misunderstood. The penny finally dropped for me from this AI-generated (sorry...) Google answer mentioning that HMRC treats gifts chronologically. 

So for gifts under £325k there is no taper relief - it is all taxed at 40% - until midnight on the day seven years after the gift is made, at which strike of the clock no tax becomes due. 

A good answer from AI 

It is a common misunderstanding about IHT, but the most common one seems to be that any gift above £3K will automatically attract tax . I think this is because the way it is ( badly) explained in the media, actually gives that impression sometimes.