IHT on Gifts

Pollypocket27

I received a gift from my stepdad of £200k in April 2021. He passed away suddenly in February 2025. I know there was other gifts but unsure of the values etc. If I owe IHT when should I find out as I thought it was 6month after a death but it has been over 12 months

Brie

As I understand it it would be the estate that owes the IHT not you. And that's only if the estate would have been subject to IHT - many aren't.

Who is dealing with the estate?

Albermarle

https://forums.moneysavingexpert.com/discussion/6663833/iht-on-gifts

Have you asked the executor of the estate? They should be able to give you some idea of what is happening.

Normally the estate pays all IHT due, but sometimes where there are large gifts involved, some liability can fall on the recipients of the gifts.

Is his wife still alive?

Pollypocket27

Its all with the solicitors, they are the executors but we are still waiting on everything to be sorted. We haven't heard anything since December. I was of the understanding IHT due on gifts was payable by the recipient as it was gifted prior to him passing.

Linton

https://forums.moneysavingexpert.com/discussion/comment/81960017#Comment_81960017

HMRC do have the right to claim the IHT on gifts from the beneficiaries but it is usually paid by the estate. The will may have words to that effect.

poseidon1

https://forums.moneysavingexpert.com/discussion/comment/81960017#Comment_81960017

It is a common and persistent misconception that substantial gifts within 7 years of death automatically attract an IHT liabilty on the recipient, in situations where the estate itself is large enough to attract IHT.

In your case it is possible your £200k gift merely accelerated use of your step father's £325k nil rate band that would have ordinarily been available at point of death, leaving £125k.

If as you say there were other gifts pre death, they would have needed to exceed the remnants of the nil rate band, for any of the beneficiaries concerned to have a primary liability to IHT on their respective gifts.

More than enough time has elapsed to determine if any of the pre death gifts were taxable and even if they were, if yours was the first gift your step father made chronologically, you are still off the hook for any possible IHT beneficiary chargeback, which might explain why nothing has been said to you on the matter.

Albermarle

https://forums.moneysavingexpert.com/discussion/comment/81960017#Comment_81960017

That is not correct, there is a lot of misunderstanding generally about IHT and gifts. Partly due to poor info in the media.

As the gift was made within 7 years of his death, it will be counted back into the value of the estate, as part of the calculation of the estates IHT liability ( if any) . Only in certain circumstances, where there have been large gifts, some liability can also come on to the receiver of the gift. However as mentioned in the previous post, the estate may just pay this . HMRC do not care where the money comes from as long as they get what they are due. Normally the IHT should be sorted by now, so not sure why you get no answers. I would just keep chasing them .

Keep_pedalling

It is very rare that people receiving gifts have to pay IHT on those gifts for you to be responsible he would have hand to make significant gifts to others before you received your gift and he would have had to given away so much there was not sufficient left in his residual estate to pay any IHT due.

Brie

Don't forget there is the taper effect on gifts that may reduce some liability - for other gifts if not for the OP.

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The 7 year rule

No tax is due on any gifts you give if you live for 7 years after giving them - unless the gift is part of a trust. This is known as the 7 year rule.

If you die within 7 years of giving a gift and there’s Inheritance Tax to pay on it, the amount of tax due after your death depends on when you gave it.

Gifts given in the 3 years before your death are taxed at 40%.

Gifts given 3 to 7 years before your death are taxed on a sliding scale known as ‘taper relief’.

Taper relief only applies if the total value of gifts made in the 7 years before you die is over the £325,000 tax-free threshold.

Taper relief

Years between gift and death	Rate of tax on the gift
3 to 4 years	32%
4 to 5 years	24%
5 to 6 years	16%
6 to 7 years	8%
7 or more	0%

Keep_pedalling

Just for clarity, taper relief also only applies to the amount over £325k not the total amount.