Inheritance tax and gifting question

2childmum2

I am trying to pull together all the relevant information regarding money myself and my husband have gifted to our children so that they have paperwork in place should my husband and I pass away. At the moment I don't  think the estate (on the death of the second one of us) will owe inheritance tax, but our house is going up in value and I may inherit some money from elderly parents , which may make IHT due 

Most of our giving has been money to support our children whilst at university. I googled whether this would be counted towards IHT, and the AI summary talked about a ' duty of care' towards children whilst they are in full time education, which meant that money given towards education and maintenance would not count.  However, I haven't been able to find any official source for this.

Can anyone confirm if this is correct, and if so point me in the direction of official information about it?

Many thanks 

poseidon1

2childmum2 said:

I am trying to pull together all the relevant information regarding money myself and my husband have gifted to our children so that they have paperwork in place should my husband and I pass away. At the moment I don't  think the estate (on the death of the second one of us) will owe inheritance tax, but our house is going up in value and I may inherit some money from elderly parents , which may make IHT due 

Most of our giving has been money to support our children whilst at university. I googled whether this would be counted towards IHT, and the AI summary talked about a ' duty of care' towards children whilst they are in full time education, which meant that money given towards education and maintenance would not count.  However, I haven't been able to find any official source for this.

Can anyone confirm if this is correct, and if so point me in the direction of official information about it?

Many thanks 

As you will see from the checklist below compiled by the Institute of Fiscal Studies, gifts to children over 18 for their maintenance , education or training, attract an unlimited IHT exemption ( Family Maintenance) - 

https://ifs.org.uk/taxlab/taxlab-data-item/specific-gift-exemptions-inheritance-tax#:~:text=Gifts to the giver's


The statutory reference and a more expansive  explanation in the article below -

https://www.nelsonslaw.co.uk/inheritance-tax-maintenance/#:~:text=Section 11 of the Inheritance Tax Act – Dispositions for maintenance,of the education and maintenance.

2childmum2

Exactly what I was looking for. Thank you. I will have a proper look when I have a larger screen to see it on.

I would also like to know if this is still the case if a child finishes a degree, works for a short while, and then decides to complete a masters. We have given my daughter money to pay the fees and a chunk of the accommodation. Hopefully the links you have given will make this clear

poseidon1

2childmum2 said:

Exactly what I was looking for. Thank you. I will have a proper look when I have a larger screen to see it on.

I would also like to know if this is still the case if a child finishes a degree, works for a short while, and then decides to complete a masters. We have given my daughter money to pay the fees and a chunk of the accommodation. Hopefully the links you have given will make this clear

I can't see the short period of work between degrees being a material  issue ( no difference from her picking up casual work during her 1st degree vacations). Her going on to do a full time masters can be correctly construed as a continuation of her full time education you have been funding. 

Keep_pedalling

If you inherit from your parents and it puts you in IHT territory you could consider making a deed of variation to pass some of that inheritance directly to your children. This effectively means the inheritance is never part of your estate for IHT purposes.

2childmum2

I was thinking about that. I wasn't sure whether it would still count as gifting it from my estate if I  had made the choice to have some of the money go to our children.

Keep_pedalling

2childmum2 said:

I was thinking about that. I wasn't sure whether it would still count as gifting it from my estate if I  had made the choice to have some of the money go to our children.

As long as you do it within 2 years of the death then it avoids the 7 year rule. 

2childmum2

Great, thankyou