Question about Inheritance Tax. Giving the money back.
Discussion
Hi
If grandparents gifted money to grandchildren, the grandchildren are liable to pay Inheritance Tax, of course.
If the grandchildren, due to unforeseen circumstances, need to give the money back, are they still liable to pay the Inheritance Tax or is considered to part of the grandparents estate again?
If grandparents gifted money to grandchildren, the grandchildren are liable to pay Inheritance Tax, of course.
If the grandchildren, due to unforeseen circumstances, need to give the money back, are they still liable to pay the Inheritance Tax or is considered to part of the grandparents estate again?
Sorry I should've been more clear. Consider this scenario (numbers are arbitrary):
- Grandparents give money grandchildren
- Grandchildren decide, 2 years later, they don't want the money for whatever reason (grandparents still alive at this stage)
- Money is returned to grandparents (grandparents still alive at this stage)
Is the money considered as part of the grandparents estate again? Or, as it was originally gifted, are grandchildren still expected to pay Inheritance Tax (if there are any when grandparents die)?
- Grandparents give money grandchildren
- Grandchildren decide, 2 years later, they don't want the money for whatever reason (grandparents still alive at this stage)
- Money is returned to grandparents (grandparents still alive at this stage)
Is the money considered as part of the grandparents estate again? Or, as it was originally gifted, are grandchildren still expected to pay Inheritance Tax (if there are any when grandparents die)?
Eric Mc said:
Gifts to and from people "inter vivo" i.e. whilst still alive - are pure gifts and are not subject to any forms of tax.
A makes a gift to B
The gift leaves A's estate and goes to B's estate.
B gives a gift to A - which happens to be of the same value as the original gift from A to B.
The same principle applies, the gift from B to A leaves B's estate and becomes part of A's estate.
No IHT is chargeable on any of those transactions.
I am assuming that neither party dies in the intervening 7 years.
If, in this example, A dies within 7 years but after B gives A of same value as the original gift, do you know what the situation would be?A makes a gift to B
The gift leaves A's estate and goes to B's estate.
B gives a gift to A - which happens to be of the same value as the original gift from A to B.
The same principle applies, the gift from B to A leaves B's estate and becomes part of A's estate.
No IHT is chargeable on any of those transactions.
I am assuming that neither party dies in the intervening 7 years.
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