Inheritance Tax

[Marky101]

If my father gifts me £ 500,000 from his personal bank account and dies soon after could it still be subject to IHT even though his wife is still alive.

[AuntPG]

His wife still being alive is irrelevant. If someone dies within 7 years of giving a gift and there's Inheritance Tax to pay, the amount of tax due depends on when they gave it. Gifts given in the 3 years before death are taxed at 40%.

[Buenchico]

I wholly agree with APG but I'll point out that if the whole of your father's estate (apart from the gift that he's given you) passes directly to his wife, everything contained within it will be exempt from IHT. So (assuming that he's not given gifts to others, which would complicate things) IHT would only apply to the £500k. However the first £325k would be covered by the tax-free allowance anyway, leaving only £175k to pay tax on.

If however, your father leaves part of his estate to you and/or to others, things get even more complicated! It might be possible to reduce any potential tax burden through creating a trust but you'd need a specialist in the field to help you do so. Creating and administering trusts can easily go badly wrong if done incorrectly!

[Peter Pedant]

agree both
325 goes on the allowance - adn 40% on remainder
what about the 50 or 100 before that?
it is counted up in order of date
and the AMOUNT doesnt taper ( common misunderstanding)
the rate of tax tapes - 8% on those gifts given 5to 6 y ago

https://www.gov.uk/inheritance-tax/gifts

Lord Justice scrunty or send-em-down said of wills trusts
'they have had their day as a way of saving IHT'

at death the trust property is counted as the donor's

[Peter Pedant]

Parents need to give it now and then live 7 y
very few do