inheritance tax question.

[cassa333]

About 2.5 yrs ago my father gave me �80000 to help pay for my house (that I live in with my family). I didn't declare it as I tought it was a gift that will come out of my share of his estate when he died.

He has now died. Do I now pay capital gains tax or inheritance tax or both?

Thank you

[anniebird]

As the gift was made less than 7 years ago the amount will be added back to your father's estate to see if it will be subject to Inheritance Tax. (There is a sliding scale deduction for any gifts given less than 7 years ago so not all of it will be taken into consideration) Any IHT will be calculated and must be paid before the estate can be distributed. I would suggest your share should then be reduced by �80,000. There will be no Capital Gains Tax to pay.

[cassa333]

Thank you.

It has been a bit of a worry as I wasn't sure at the time if I was suppose to declare it for capital gains.

My brother who is executor, is dealing with everything and has taken great delight in telling me I will have a double tax bill to pay.

Does the IHT get paid by individuals or does the executor deal with it? And if they do can I see what they have been up to and how they apportion my share of tax?

[Rollo]

IHT is paid by the executor(s), not the individual beneficiaries of the estate.

I don't know why anniebird is suggesting that your share of the estate should be reduced by the �80,000. If your father's will says you are entitled to �x, or to a set proportion of the estate, then that is what you sould get - subject to any reduction because IHT has to be paid.

[cassa333]

Thank you.

I think Anniebird is saying that because the 80000 was part of the estate and we have already had it.

Therefore if his estate is worth about 600,000 including the 80000 then after iht of aprox 90000, split this amount by 3 would leave 170000 each but I have had 80000 so I would get 90000.???

Does this seem right?



I don't think

[Rollo]

If you were given a gift of the �80,000 - rather than a repayable loan - then the �80,000 does not form part of the estate, except for the particular purpose of determining the extent of any IHT payable.

For example, suppose your father had given me the �80,000 as a gift, instead of to you. I am not a mentioned beneficiary under his will, but I still have the �80,000 and the value of the assets available to the named beneficiaries is therefore �80,000 less that it otherwise would have been, and any IHT due on the gift to me would have to be borne by the beneficiaries of the estate.

The point I am trying to make is that your share of the estate is whatever your father's will says it is. The �80,000 would only be taken into account if your father's will said that your share should be adjusted to take account of the fact that you have already received the gift.

[cassa333]

Perhaps my brother knows this and that is why he is narked?

Will I still have to pay capital gains on it though?

[R1Geezer]

capital gains tax has no relevance here. This is an IHT issue only.

IHT will be payable under taper relief on the 80k and at the full rate for the rest. The IHT will be taken out of the estate so morally you should share the cost with the other beneficiaries.

[dzug]

If there were no other gifts then taper relief doesn't apply - it only come into play if gifts are more than the IHT threshold.

[cassa333]

Thank you for all your replys.

This help ease my worries a bit.

I always assumed that the gift was part of my share of my eventual inheritance so have no problem including it with the estate. However if my brother becomes difficult I could (just to prove a point) say it is not included in the end share equation. I don't think I will bother though.

As my brother is a trustee and will be executor but he won't let me have a copy of our mothers will (which he has a copy of) can I go to the sloicitors that the original is lodged with and ask for a copy before the funeral and reading? or do I have to wait?

Thanks