Your browser isn't supported
It looks like you're using an old web browser. To get the most out of the site and to ensure guides display correctly, we suggest upgrading your browser now. Download the latest:

Welcome to the MSE Forums

We're home to a fantastic community of MoneySavers but anyone can post. Please exercise caution & report spam, illegal, offensive or libellous posts/messages: click "report" or email forumteam@. Skimlinks & other affiliated links are turned on

Search
  • FIRST POST
    • roadweary
    • By roadweary 14th Aug 19, 5:34 PM
    • 76Posts
    • 5Thanks
    roadweary
    Rules on Gifting Money
    • #1
    • 14th Aug 19, 5:34 PM
    Rules on Gifting Money 14th Aug 19 at 5:34 PM
    Hi,

    My father passed away last October and my mother is 84 years old.

    She wants to give money to each of her grandchildren but is confused as to the rules about how much she is allowed to give.

    She would like to give £2000 each to 5 grandchildren.

    I have read around but am not entirely clear.

    I *think* what the rules are saying is:

    The total amount she can give away per tax year, tax free is £3000.

    If she gave away £10,000 and died within 7 years, then at that point the £10,000 that was given away would be added to the value of the estate, and inheritance tax would be calculated on the entire estate.

    In other words, there is no tax now, but only if she passes away, as part of the inheritance tax on her estate, and then dependent on when; within 3 years - fully taxable, 3-7 years - taper relief, over 7 years - no tax implications.

    Is that correct?

    She would prefer to give all the gifts in one go...and she's asked me to look into it for her.

    Any advice gratefully received.

    Thanks,
    R
Page 1
    • xylophone
    • By xylophone 14th Aug 19, 6:28 PM
    • 31,008 Posts
    • 19,155 Thanks
    xylophone
    • #2
    • 14th Aug 19, 6:28 PM
    • #2
    • 14th Aug 19, 6:28 PM
    https://www.gov.uk/inheritance-tax/gifts

    Is your mother's estate of a size that IHT will be payable?

    Any transferable nil rate band?

    Family home allowance?

    https://www.gov.uk/government/publications/inheritance-tax-main-residence-nil-rate-band-and-the-existing-nil-rate-band/inheritance-tax-main-residence-nil-rate-band-and-the-existing-nil-rate-band

    And re "taper relief" which applies only on gifts after the Nil Rate Band has been used up see

    https://www.telegraph.co.uk/tax/inheritance/inheritance-tax-happens-make-gift-die-within-seven-years/
    • Keep pedalling
    • By Keep pedalling 14th Aug 19, 6:58 PM
    • 6,900 Posts
    • 8,097 Thanks
    Keep pedalling
    • #3
    • 14th Aug 19, 6:58 PM
    • #3
    • 14th Aug 19, 6:58 PM
    This is only really of concern if her estate is in excess of her nil rate band and the transferable nil rate band from her husband, which assuming she inherited all of her husband’s estate is £650,000. If she owns a house then we are talking £950,000 (rising to £1M next April).
    • roadweary
    • By roadweary 14th Aug 19, 7:25 PM
    • 76 Posts
    • 5 Thanks
    roadweary
    • #4
    • 14th Aug 19, 7:25 PM
    • #4
    • 14th Aug 19, 7:25 PM
    This is only really of concern if her estate is in excess of her nil rate band and the transferable nil rate band from her husband, which assuming she inherited all of her husbandís estate is £650,000. If she owns a house then we are talking £950,000 (rising to £1M next April).
    Originally posted by Keep pedalling
    Ah, hadn't realised that. The estate would not exceed £650,000 so I think she is free to do with her money as she chooses?

    Most of the money is in the house.....and it's hypothetical due to the total value of her estate....but you are saying that there is an extra £300,000 nil rate allowance for property?

    Thanks,
    R
    • Keep pedalling
    • By Keep pedalling 14th Aug 19, 9:46 PM
    • 6,900 Posts
    • 8,097 Thanks
    Keep pedalling
    • #5
    • 14th Aug 19, 9:46 PM
    • #5
    • 14th Aug 19, 9:46 PM
    Ah, hadn't realised that. The estate would not exceed £650,000 so I think she is free to do with her money as she chooses?

    Most of the money is in the house.....and it's hypothetical due to the total value of her estate....but you are saying that there is an extra £300,000 nil rate allowance for property?

    Thanks,
    R
    Originally posted by roadweary
    Even if her estate was in IHT territory she would still be free to gift what she liked, is just that the remaining estate would pay IHT on PET gifts they where still within 7 years.

    What she does need to be careful of is leaving herself asset rich and cash poor. Owning a house that you donít have available to par for majors repairs when they occur is not a good position to be in. I know som of my elderly neighbours who are sitting on a small fortune but live like paupers.
    • xylophone
    • By xylophone 14th Aug 19, 9:58 PM
    • 31,008 Posts
    • 19,155 Thanks
    xylophone
    • #6
    • 14th Aug 19, 9:58 PM
    • #6
    • 14th Aug 19, 9:58 PM
    but you are saying that there is an extra £300,000 nil rate allowance for property?
    Read link in my post above for when this applies.
    • Tom99
    • By Tom99 15th Aug 19, 4:21 AM
    • 4,803 Posts
    • 3,360 Thanks
    Tom99
    • #7
    • 15th Aug 19, 4:21 AM
    • #7
    • 15th Aug 19, 4:21 AM
    As said there is no immediate tax on gifts so she can gift £10,000 now.
    If she did not make any gifts last year that £3,000 can be carried forward so £6,000 would be IHT free with £4,000 a PET.
    There would be no taper relief unless gifts in the last 7yrs were more than £650k since gifts are the 1st thing to eat into the NRB and only when the NRB has been exhausted by gifts does taper relief come into play.
    • roadweary
    • By roadweary 15th Aug 19, 6:44 AM
    • 76 Posts
    • 5 Thanks
    roadweary
    • #8
    • 15th Aug 19, 6:44 AM
    • #8
    • 15th Aug 19, 6:44 AM
    Having read that, I'm still not completely clear. Does this mean on top of the 650k of nil rate that she has, she also has 150k from my dad, and 150k of her own nil rate on the sale of the house?

    Thanks,
    R
    • roadweary
    • By roadweary 15th Aug 19, 6:45 AM
    • 76 Posts
    • 5 Thanks
    roadweary
    • #9
    • 15th Aug 19, 6:45 AM
    • #9
    • 15th Aug 19, 6:45 AM
    Even if her estate was in IHT territory she would still be free to gift what she liked, is just that the remaining estate would pay IHT on PET gifts they where still within 7 years.

    What she does need to be careful of is leaving herself asset rich and cash poor. Owning a house that you donít have available to par for majors repairs when they occur is not a good position to be in. I know som of my elderly neighbours who are sitting on a small fortune but live like paupers.
    Originally posted by Keep pedalling
    Hi,

    Yes, that makes absolute sense and I am keeping an eye on that for her.

    Thanks,
    R
    • Keep pedalling
    • By Keep pedalling 15th Aug 19, 6:48 AM
    • 6,900 Posts
    • 8,097 Thanks
    Keep pedalling
    Having read that, I'm still not completely clear. Does this mean on top of the 650k of nil rate that she has, she also has 150k from my dad, and 150k of her own nil rate on the sale of the house?

    Thanks,
    R
    Originally posted by roadweary
    Yes providing the house is worth £300k or more and is left to direct descendants.. This also applies if the house is sold to downsize, or move into sheltered accommodation or care home before the testator dies.
    • Dox
    • By Dox 15th Aug 19, 9:47 PM
    • 1,558 Posts
    • 1,170 Thanks
    Dox
    She wants to give money to each of her grandchildren but is confused as to the rules about how much she is allowed to give.
    Originally posted by roadweary
    She can give whatever she wants/can afford to give. Don't let the tax implications (which may be nil, but given the sums involved won't be very great in any case) take precedence over her desire to help her grandchildren now rather than later.
Welcome to our new Forum!

Our aim is to save you money quickly and easily. We hope you like it!

Forum Team Contact us

Live Stats

115Posts Today

1,424Users online

Martin's Twitter