Inheritance tax.

[pete01]

Can anyone settle this for me?

A friend of mine wants to gift his two kids 10k each, someone has told him they will have to pay tax as the max gift is 3k.

My understanding is that tax will only need to be paid if he was to die within 7 years, and if his estate was worth over £325.000 ( which it isnt)

Thoughts?

 

[Munroast]

you are correct (99% sure)

 

[MNW67]

You are correct on both points.

No problem (at the moment) if his estate is under 325K.

Rules can change, though.

 

[Deleted member 317777]

Can anyone settle this for me?

A friend of mine wants to gift his two kids 10k each, someone has told him they will have to pay tax as the max gift is 3k.

My understanding is that tax will only need to be paid if he was to die within 7 years, and if his estate was worth over £325.000 ( which it isnt)

Thoughts?

There’s a new ruling from what I can gather.

HMRC giving UK households with 'sufficient income' inheritance tax loophole

Where available, gifts made are immediately outside the donor’s estate.

www.birminghammail.co.uk

 

[Jurassicspark]

Yeah correct most likely.

I also heard that if the person hasn't used the previous year allowance, it can be carried forward to the current one. However the max is only one year.

The gift will be classed as a PET. Regarding the 325k, that allowance will be reduced by the gifts made if the person giving the gifts dies within seven years.

There are some rules on exempt transfers like marriage allowances and charities but I don't think this counts here.

Anyways how you doing Pete?

 

[MNW67]

There’s a new ruling from what I can gather.

I don't think it's actually a new ruling. The law has been there since 1981, I believe. I've been using this exemption a little bit myself, so I had to look into it because the rules are pretty complex.

 

[pete01]

There’s a new ruling from what I can gather.

HMRC giving UK households with 'sufficient income' inheritance tax loophole

Where available, gifts made are immediately outside the donor’s estate.

www.birminghammail.co.uk

That means nothing to me

 

[pete01]

Anyways how you doing Pete?

Good mate thanks yourself?

 

[MNW67]

That means nothing to me

It is really complicated!

I am sure I read that the latest figures show only 700 estates made use of it each year. Although that research came from a few years ago.

It means that if you have surplus income each year you can give money away and it immediately becomes free of inheritance tax. But the gifts need to be regular and be part of a pattern.

 

[pete01]

It means that if you have surplus income each year you can give money away and it immediately becomes free of inheritance tax. But the gifts need to be regular and be part of a pattern.

Oh ok, I think this is just a one time gift.

 

[MNW67]

Oh ok, I think this is just a one time gift.

Your friend should be fine. As long as he hasn't given away lots of money already!

 

[diy_fun_uk]

How good are they at discovering gifts like this in reality? e.g. he gives them the cash today and dies 6 years from now. Does anyone actually check?

 

[pete01]

How good are they at discovering gifts like this in reality? e.g. he gives them the cash today and dies 6 years from now. Does anyone actually check?

Depends how honest you are I suppose, when my mom died the solicitor asked me if she had given me any large amounts of money in the past, I was honest she hadn't.

 

[diy_fun_uk]

Depends how honest you are I suppose, when my mom died the solicitor asked me if she had given me any large amounts of money in the past, I was honest she hadn't.

Only a fool would say yes imo.

Feck 'em.

 

[pete01]

Only a fool would say yes imo.

Feck 'em.

I was just going to say if she had I would of said she hadn't