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    • mnbvcxzasdf
    • By mnbvcxzasdf 5th Aug 18, 10:47 AM
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    mnbvcxzasdf
    IHT gift date question
    • #1
    • 5th Aug 18, 10:47 AM
    IHT gift date question 5th Aug 18 at 10:47 AM
    My father informed me and the rest of my family in March 2013 that he had set aside a sizeable amount of money as a gift for me to use as deposit on a flat as a First Time Buyer.

    However, as I was working in temporary jobs on zero hours contracts, I asked him to look after the money for me until I was in permanent employment and able to get a decent mortgage.

    This is finally the case, and the money was paid in by cheque to my account in May of this year. Now tragically, it has emerged that my father has a terminal condition and is going to die within months. In his will he has left his entire estate to his wife which is I believe will total around 500k.

    Will there be IHT to pay on his gift to me, and if so will it be at 40%, or will it be tapered down as the money was gifted between five and six years ago?
Page 1
    • xylophone
    • By xylophone 5th Aug 18, 11:13 AM
    • 26,128 Posts
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    xylophone
    • #2
    • 5th Aug 18, 11:13 AM
    • #2
    • 5th Aug 18, 11:13 AM
    as the money was gifted between five and six years ago?
    The intention to gift was there but it would appear that the gift was not actually made?

    However see

    https://www.gov.uk/guidance/work-out-what-part-of-your-estate-pays-inheritance-tax
    • Linton
    • By Linton 5th Aug 18, 12:39 PM
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    Linton
    • #3
    • 5th Aug 18, 12:39 PM
    • #3
    • 5th Aug 18, 12:39 PM
    The gift to you of x will be added to his estate to calculate the inheritance tax. Bequests to a spouse are not subject to IHT. So the taxable part of the estate will be x plus any other gifts minus the annual gift allowance of 3K. If the taxable part of the estate is less than 325K there will be no IHT to pay.


    When your mother dies her tax free allowance will include both her and your fathers allowance, ie 325K + 325K -(x-3000), assuming there are no other gifts to complicate things.


    In any case the tax will normally be paid by the estate, not you.
    • Keep pedalling
    • By Keep pedalling 5th Aug 18, 2:54 PM
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    Keep pedalling
    • #4
    • 5th Aug 18, 2:54 PM
    • #4
    • 5th Aug 18, 2:54 PM
    Even if the gift was 5 or 6 years ago, unless it was over 325k taper relief does not apply.

    You actually got the gift this year, in which case IHT will only need to be paid if the gift was over 325k (328k if he has not used his annual allowance) and that will be 40% on every pound over that amount, which would normally come out of the remaining estate.

    The real impact will be on his wifes estate as your gift will reduce the transferable nil rate band her executors will be able to claim.
    • smjxm09
    • By smjxm09 9th Aug 18, 4:57 AM
    • 522 Posts
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    smjxm09
    • #5
    • 9th Aug 18, 4:57 AM
    • #5
    • 9th Aug 18, 4:57 AM
    No doubt I will be corrected here.

    325,000=Fathers allowance
    125,000=Fathers main home allowance
    325,000=Mothers allowance
    125,000=Mothers main home allowance

    Total 900,000 for tax year 2018/19
    Total 950,000 for tax year 2019/20
    Total 1 million for tax year 2020/21 before IHT is due once your fathers allowance has passed to your mother.

    Might it not be the case that the best thing to do is treat the cheque as a loan and give the money back upon your fathers death and then get another cheque from your mother? Or get your mother to give you a cheque now allowing you to return your fathers money while he is still alive?

    Also is it not the case that your mother might already owns half the joint estate so your fathers estate is 250,000 so your gift could be exempt as joint tenants or tenants in common might might also make a difference perhaps?

    I would have thought there was things you could still do help your situation seeing that your father is still alive like even putting the family house into your mothers name now so his estate does not include the home.

    Just random thoughts from someone who knows nothing.
    Last edited by smjxm09; 09-08-2018 at 7:33 AM.
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