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Financial Gifts To Family
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We have ringfenced £20K to help our son with a deposit for a house if necessary. Are there any financial implications with outright gifts like this (e.g. inheritance tax?) We are in our 70s.
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If a person who makes a gift dies within 7 years of making that gift then a proportion of it (reducing on a sliding scale as time goes by) is still counted as part of the deceased person's estate for the purposes of calculating any Inheritance Tax which may be due.
However no Inheritance Tax is due anyway if the value of the estate comes to less than £325,000. Further, if a married person leaves everything to their spouse, then their Inheritance Tax relief is also passed on to the spouse (meaning that there's no Inheritance Tax to be paid unless their estate is valued at over £650,000).
So unless your combined estate is likely to exceed £650,000 (and you both die within 7 years of making the gift) you have no need to worry about any tax implications of making the gift.
However no Inheritance Tax is due anyway if the value of the estate comes to less than £325,000. Further, if a married person leaves everything to their spouse, then their Inheritance Tax relief is also passed on to the spouse (meaning that there's no Inheritance Tax to be paid unless their estate is valued at over £650,000).
So unless your combined estate is likely to exceed £650,000 (and you both die within 7 years of making the gift) you have no need to worry about any tax implications of making the gift.
BC stop swigging the gin !
" If a person who makes a gift dies within 7 years of making that gift then a proportion of it (reducing on a sliding scale as time goes by) is still counted "
NO, the capital sum remains the same but the rate of tax levied on the capital sum is reduced 80-60-40-20
that is no 1
http://
and the site also goes into serial giving
What is the effect of giving three squodges of £20k at two year intervals to the same fella ?
It is concatenated to 60k and the clock restarts at the last gift
and no one give all their effects to their spouse do they nowadays ?
surely they make sure the £325k is used up?
anyway ......
why not give it now and the clock starts ticking now ? Obviously you have to trust your son and it has to be in his name
" If a person who makes a gift dies within 7 years of making that gift then a proportion of it (reducing on a sliding scale as time goes by) is still counted "
NO, the capital sum remains the same but the rate of tax levied on the capital sum is reduced 80-60-40-20
that is no 1
http://
and the site also goes into serial giving
What is the effect of giving three squodges of £20k at two year intervals to the same fella ?
It is concatenated to 60k and the clock restarts at the last gift
and no one give all their effects to their spouse do they nowadays ?
surely they make sure the £325k is used up?
anyway ......
why not give it now and the clock starts ticking now ? Obviously you have to trust your son and it has to be in his name
If we're getting into the finer points of IHT then, PP, . . .
A person can give away up to £3000 per year without any IHT implications. Further, one year's allowance can be carried forward to the next year (but no further). So, assuming that no other gifts were made during the relevant 2-year period, a £20k gift could be be given but with only £14k counting towards the value of the estate (if the benefactor then dies within 7 years).
A person can give away up to £3000 per year without any IHT implications. Further, one year's allowance can be carried forward to the next year (but no further). So, assuming that no other gifts were made during the relevant 2-year period, a £20k gift could be be given but with only £14k counting towards the value of the estate (if the benefactor then dies within 7 years).
Practically speaking BC
I gave a half a flat in ( London ) mucho mucho money to my nephew in 2008
so hey ! it is gonna pass out of the IHT net in six months or so
erm no not really
I gave the other half when I was diagnosed with cancer in 2013 - asking him to investigate the rules - and I think he asked a bank manager or the tea lady at work
and you will see I have been absolutely screwed by the rules
the whole of the flat's value is re set to 2013 and the clock starts ticking again. - and my blood count this week is looooow....
I gave a half a flat in ( London ) mucho mucho money to my nephew in 2008
so hey ! it is gonna pass out of the IHT net in six months or so
erm no not really
I gave the other half when I was diagnosed with cancer in 2013 - asking him to investigate the rules - and I think he asked a bank manager or the tea lady at work
and you will see I have been absolutely screwed by the rules
the whole of the flat's value is re set to 2013 and the clock starts ticking again. - and my blood count this week is looooow....
And of course even if the estate is 'unlucky'enought to come within teh IHT thresholdsAs for the political point it's a tough one it's the state that pays the tax and it's only a percentage of anything above the £325000/£650000 IHT free threshold.
As for the political point, I can see both sides here. I think Labour will get some support for their argument that the cuts to tax credits for poorer working families doesn't seem fair at the same time as the richest small percentage of the population (in asset terms) will benefit from some IHT concessions.
As for the political point, I can see both sides here. I think Labour will get some support for their argument that the cuts to tax credits for poorer working families doesn't seem fair at the same time as the richest small percentage of the population (in asset terms) will benefit from some IHT concessions.
>>>Many thanks to you both. I dont really understand how it is OK, taxwise, to spend 20K on say a holiday but not to help your children
Because it is INCOME to them and is taxable.
Lets assume you ran a family business and employed one of your children.
Instead of paying them (and them getting taxed) you could "gift" them £500 a week, and they would not have to pay tax on it. So it is to avoid this scenario.
p.s. If the tax people don't know you have this £20,000 then you could just give it to your son and no one would be any the wiser.
When my father died we had to tell the tax people how much money he had, so later when my mum died they could estimate if she had tried to dispose of assets, But before my dad died they had no idea how much money he had so he could have given away some without anyone knowing.
Because it is INCOME to them and is taxable.
Lets assume you ran a family business and employed one of your children.
Instead of paying them (and them getting taxed) you could "gift" them £500 a week, and they would not have to pay tax on it. So it is to avoid this scenario.
p.s. If the tax people don't know you have this £20,000 then you could just give it to your son and no one would be any the wiser.
When my father died we had to tell the tax people how much money he had, so later when my mum died they could estimate if she had tried to dispose of assets, But before my dad died they had no idea how much money he had so he could have given away some without anyone knowing.
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