How much can you gift a family member, tax free?
Discussion
Trackdayer said:
I'm reading conflicting things on Google. Anybody know for sure?
You can give as much as you like.....but if you die within 7 years, then it is of interest to the tax man.If that is a concern, then you can just give up to £3k (or £5k if there is a wedding at play) per year.
https://moneyfacts.co.uk/savings-accounts/guides/h...
Where is the confusion you've seen?
Jasey_ said:
Nothing when your mum is alive.
When she passes the inheritance tax forms need filling.
The executor needs to state how much was given away in the previous 7 years.
This gets added to the total assets and anything over the threshold is taxed.
If you dad left everything to your mum and they have a house that limit is probably 850 grand.
So provided its under that she should be good to gift as much as she wants.
Thanks Jasey When she passes the inheritance tax forms need filling.
The executor needs to state how much was given away in the previous 7 years.
This gets added to the total assets and anything over the threshold is taxed.
If you dad left everything to your mum and they have a house that limit is probably 850 grand.
So provided its under that she should be good to gift as much as she wants.
Out of interest - £850k - how so?
2x£325k and some additional nil rate? I cant see where you get the £200k from (only £175k if my workings are correct)
Cheers
Edited by jules_s on Friday 30th July 22:24
Jasey_ said:
Rough calcs and friday night rounding.
Might actually be more.
https://www.which.co.uk/money/tax/inheritance-tax/...
The 175k for the house can be per parent apparently.
Cheers - much appreciatedMight actually be more.
https://www.which.co.uk/money/tax/inheritance-tax/...
The 175k for the house can be per parent apparently.
Edited by Jasey_ on Friday 30th July 22:36
LeadFarmer said:
Isn't it a sliding scale used when considering any money given away by the deceased in their last 7 years of life?
If given in their year of death then it's full inheritance tax rate due, any made the year before is a reduced rate, and so on...?
Only if the gifts, on their own, are greater than the nil rate band, otherwise, as they are added into the pot first, all they do is push more of the remainder of the estate over the threshold, which is taxed at the full rate If given in their year of death then it's full inheritance tax rate due, any made the year before is a reduced rate, and so on...?
oldbanger said:
LeadFarmer said:
Isn't it a sliding scale used when considering any money given away by the deceased in their last 7 years of life?
If given in their year of death then it's full inheritance tax rate due, any made the year before is a reduced rate, and so on...?
Only if the gifts, on their own, are greater than the nil rate band, otherwise, as they are added into the pot first, all they do is push more of the remainder of the estate over the threshold, which is taxed at the full rate If given in their year of death then it's full inheritance tax rate due, any made the year before is a reduced rate, and so on...?
i.e. for the 1st 3 years if death occurs then gifts are counted towards any inheritance and are liable for the full 40% IHT,
it then reduces by 8% every year till year 7, after which it is no longer counted
government linky
as has been said, this only counts if it goes above the IHT threshold which depending on the circumstances can be as much as £1m before any tax is due.
May well affect homeowners in London quite a bit,
but for most people they won't have an estate large enough to be affected by any IHT.
LeoSayer said:
Regular gifts made out of income are immediately exempt from inheritance tax.
That's the basics, there's a bit more detail though.
Do you have a link to that detail?That's the basics, there's a bit more detail though.
HMRC said:
There’s usually no Inheritance Tax to pay on small gifts you make out of your normal income, such as Christmas or birthday presents. These are known as ‘exempted gifts’
I can't find a reference to regular gifts being exempthttps://www.gov.uk/inheritance-tax/gifts
timberman said:
The sliding scale (taper relief) starts after 3 years.
i.e. for the 1st 3 years if death occurs then gifts are counted towards any inheritance and are liable for the full 40% IHT,
it then reduces by 8% every year till year 7, after which it is no longer counted
government linky
as has been said, this only counts if it goes above the IHT threshold which depending on the circumstances can be as much as £1m before any tax is due.
May well affect homeowners in London quite a bit,
but for most people they won't have an estate large enough to be affected by any IHT.
My nan used to gift myself, brother & sister £1k every year (until she passed) as this was allowed under the IHT rules.i.e. for the 1st 3 years if death occurs then gifts are counted towards any inheritance and are liable for the full 40% IHT,
it then reduces by 8% every year till year 7, after which it is no longer counted
government linky
as has been said, this only counts if it goes above the IHT threshold which depending on the circumstances can be as much as £1m before any tax is due.
May well affect homeowners in London quite a bit,
but for most people they won't have an estate large enough to be affected by any IHT.
With the IHT threshold currently at £325k, most houses alone will get you close to that figure.
My dad passed away a few years ago, with everything passing to my mum. Her house is about £200k plus their savings. But she had also received her parents estate when they died, so when mum dies I expect her estate will be over the £325 IHT threshold.
Sadly she hasn't continued what my nan did, in making £3k gifts each year
brightmotiv said:
Hypothetically, what's stopping someone just withdrawing cash and giving it to a family member over time?
I know it's not within the rules but say £250 a week could conceivably be a person's discretionary spending for example.
Do people ever get qaudited for this type of thing?
If it’s 7 years before they die, then it doesn’t matter anyway and they could just wire it to you. I know it's not within the rules but say £250 a week could conceivably be a person's discretionary spending for example.
Do people ever get qaudited for this type of thing?
If it’s within 7 years, then IHT is due. As part of probate, regular cash withdrawals will come up and will need to be explained away.
james_zy said:
brightmotiv said:
Hypothetically, what's stopping someone just withdrawing cash and giving it to a family member over time?
I know it's not within the rules but say £250 a week could conceivably be a person's discretionary spending for example.
Do people ever get qaudited for this type of thing?
If it’s 7 years before they die, then it doesn’t matter anyway and they could just wire it to you. I know it's not within the rules but say £250 a week could conceivably be a person's discretionary spending for example.
Do people ever get qaudited for this type of thing?
If it’s within 7 years, then IHT is due. As part of probate, regular cash withdrawals will come up and will need to be explained away.
Jasey_ said:
brightmotiv said:
Hypothetically, what's stopping someone just withdrawing cash and giving it to a family member over time?
I know it's not within the rules but say £250 a week could conceivably be a person's discretionary spending for example.
Do people ever get qaudited for this type of thing?
There are no rules about what you do with your money.I know it's not within the rules but say £250 a week could conceivably be a person's discretionary spending for example.
Do people ever get qaudited for this type of thing?
The rules come into play when you die.
And you won't give a f
k by then 
The exectors have to notify hmrc of any gifts.
If they get it wrong they become liable for any tax due.
I can see why people take it seriously given the potential tax liability etc
I'd assume that if you had regular spends of say £250/week this could be easily explained away as flowers, fags & fine champagne?
Jasey_ said:
Nothing when your mum is alive.
When she passes the inheritance tax forms need filling.
The executor needs to state how much was given away in the previous 7 years.
This gets added to the total assets and anything over the threshold is taxed.
If you dad left everything to your mum and they have a house that limit is probably 850 grand.
So provided its under that she should be good to gift as much as she wants.
Sorry to but in, but this is of interest to me.When she passes the inheritance tax forms need filling.
The executor needs to state how much was given away in the previous 7 years.
This gets added to the total assets and anything over the threshold is taxed.
If you dad left everything to your mum and they have a house that limit is probably 850 grand.
So provided its under that she should be good to gift as much as she wants.
My situation is my dad left the house to me and my mum, still have the will saying that. He died in 1994.
My mum is now in a care home and wrote a will leaving the house and bank accounts to me (only child).
All in all this probably totals 710k but we need to spend around 30k on the house and pay whatever the care-home will cost when she goes.
My question is, you mention 850k above, so I won't be liable for inheritance tax?
I hate this stuff and really stick my head in the sand about it.
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