Discussion
Struggling to find information on google but if a married couple in their late 60s were to give their child a cash gift (via bank payment) thats over the gift allowance am I right in saying that the 7 year rule applies, so in the first 3 years IHT would be 40% and from year 4 to 7 its tapered.
However the question is if one of the couplie dies is 50% of the gift taxed or 100%?
Obviously its unlikely both will die (lets say both are fit and healthy) at the same time so the chances are it would just be one of them, if it did happen.
Also, one last question. Rather than give the child a gift they were to make a loan, 0% interest, and one of them were to die would 50% (or 100%?) of the loan need paying back into the estate?
However the question is if one of the couplie dies is 50% of the gift taxed or 100%?
Obviously its unlikely both will die (lets say both are fit and healthy) at the same time so the chances are it would just be one of them, if it did happen.
Also, one last question. Rather than give the child a gift they were to make a loan, 0% interest, and one of them were to die would 50% (or 100%?) of the loan need paying back into the estate?
Edited by gotoPzero on Sunday 28th July 12:03
Unless you are physically handing over cash, commodities (e.g. gold) or items purchased for the person being gifted.......HMRC now have the right ( and the computing power) if they have a reason to ....to dig into your bank, investment accounts etc etc . Even an idiot algorithm can quickly come up with a short "target" list of others to cross investigate . The joys of digital transactions
A good example of a trigger might be the death of someone previously with decent size wealth dying with suspiciously low net worth ?
etc....
Footnote: this was referring to what @Omniflow commented/asked. (I should have quoted )
A good example of a trigger might be the death of someone previously with decent size wealth dying with suspiciously low net worth ?
etc....
Footnote: this was referring to what @Omniflow commented/asked. (I should have quoted )
Edited by PM3 on Sunday 28th July 13:01
That does not bother me or them they know that.
I have been asked the following...
If Mr A is hit by a bus the day after the gift is the tax 50% of the total or 100% of the total?
Also asked if they decide to make it a loan @ 0% to give zero SA302 issues, and the same happens is 50% of the loan repayable or 100%? Or none, just as per loan contract?
Its a joint gift from Mr & Mrs A.
I have been asked the following...
If Mr A is hit by a bus the day after the gift is the tax 50% of the total or 100% of the total?
Also asked if they decide to make it a loan @ 0% to give zero SA302 issues, and the same happens is 50% of the loan repayable or 100%? Or none, just as per loan contract?
Its a joint gift from Mr & Mrs A.
Under current tax rules, a joint gift doesn't really exist. That's because each person, including married couples, are taxed individually.
Having said that, a gift from a joint bank account is generally accepted by HMRC as being split 50/50. This is consistent with how they treat the tax liability for any interest received for that account. The % split will change if the account holders have opted to tell HMRC about a different split.
But, there are occasions where the size of the gift will lead HMRC to look into who actually paid into the joint account. For instance, if the gift was £1m and it made a significant difference to how much IHT may be paid, they would audit the account to work out a true % split.
Therefore, the answer to the question is, as with all tax, depends on the specific circumstances.
Having said that, a gift from a joint bank account is generally accepted by HMRC as being split 50/50. This is consistent with how they treat the tax liability for any interest received for that account. The % split will change if the account holders have opted to tell HMRC about a different split.
But, there are occasions where the size of the gift will lead HMRC to look into who actually paid into the joint account. For instance, if the gift was £1m and it made a significant difference to how much IHT may be paid, they would audit the account to work out a true % split.
Therefore, the answer to the question is, as with all tax, depends on the specific circumstances.
I think cash / equivalents are the answer here if you are talking tens of thousands and not hundreds of thousands.
https://www.gov.uk/inheritance-tax/gifts lays out the gifts and gifts from income options, but it's hard to prove what happened to any cash withdrawals that somebody makes.
https://www.gov.uk/inheritance-tax/gifts lays out the gifts and gifts from income options, but it's hard to prove what happened to any cash withdrawals that somebody makes.
uknick said:
a gift from a joint bank account is generally accepted by HMRC as being split 50/50.
Yes, if you wanted to claim it was anything else you'd need to come up with a VERY convincing explanation.As regards taper, remember it's the tax payable that tapers and not the gift. The amount of the gift remains "used" from your tax free IHT allowance of £325,000 throughout the entire 7 years.
gotoPzero said:
So just so this is clear in my head, if something happens its me thats liable for the tax right?
The estate pays the tax on everything else.
If yes, would my personal allowance be applicable?
What do you mean by " if something happens its me that's liable for the tax right"?The estate pays the tax on everything else.
If yes, would my personal allowance be applicable?
If you're talking about IHT, that has nothing to do with your personal allowance.
uknick said:
gotoPzero said:
So just so this is clear in my head, if something happens its me thats liable for the tax right?
The estate pays the tax on everything else.
If yes, would my personal allowance be applicable?
What do you mean by " if something happens its me that's liable for the tax right"?The estate pays the tax on everything else.
If yes, would my personal allowance be applicable?
If you're talking about IHT, that has nothing to do with your personal allowance.
Ok sorry some clarification.
I am not giving anyone anything.
I am receiving the gift.
I am trying to clarify, if the worst was to happen and ONE or BOTH of the givers of the gift were to die in the first 3 years what is the situation for me.
To the best of my knowledge as far as I can tell its that I would be liable for tax @ 40% on
50% of the gift if one of them dies
or
100% of the gift if both of them were to die.
Then my next question is.
If for some reason either of them were to die, can I use my personal allowance towards any tax due. (assuming the above is correct and its me who is liable for the tax - which I think it is)
I am not giving anyone anything.
I am receiving the gift.
I am trying to clarify, if the worst was to happen and ONE or BOTH of the givers of the gift were to die in the first 3 years what is the situation for me.
To the best of my knowledge as far as I can tell its that I would be liable for tax @ 40% on
50% of the gift if one of them dies
or
100% of the gift if both of them were to die.
Then my next question is.
If for some reason either of them were to die, can I use my personal allowance towards any tax due. (assuming the above is correct and its me who is liable for the tax - which I think it is)
gotoPzero said:
Ok sorry some clarification.
I am not giving anyone anything.
I am receiving the gift.
I am trying to clarify, if the worst was to happen and ONE or BOTH of the givers of the gift were to die in the first 3 years what is the situation for me.
To the best of my knowledge as far as I can tell its that I would be liable for tax @ 40% on
50% of the gift if one of them dies
or
100% of the gift if both of them were to die.
Then my next question is.
If for some reason either of them were to die, can I use my personal allowance towards any tax due. (assuming the above is correct and its me who is liable for the tax - which I think it is)
It's only 50/50 if the origin of the money was 50/50. And that doesn't mean it came from a joint account, it's a matter of how the money got there in the first place. 50/50 might be valid but it might not.I am not giving anyone anything.
I am receiving the gift.
I am trying to clarify, if the worst was to happen and ONE or BOTH of the givers of the gift were to die in the first 3 years what is the situation for me.
To the best of my knowledge as far as I can tell its that I would be liable for tax @ 40% on
50% of the gift if one of them dies
or
100% of the gift if both of them were to die.
Then my next question is.
If for some reason either of them were to die, can I use my personal allowance towards any tax due. (assuming the above is correct and its me who is liable for the tax - which I think it is)
The deceased's estate is liable for any IHT. HMRC will only come after you if there's not enough money in the estate to settle the IHT bill.
If you're really worried you can insure against it. I would guess the premium would be hefty though.
Sheepshanks said:
The deceased's estate is liable for any IHT. HMRC will only come after you if there's not enough money in the estate to settle the IHT bill.
If you're really worried you can insure against it. I would guess the premium would be hefty though.
Not entirely true. Anything that's above the Nil Rate Band is where taper relief applies and the donee is liable for the IHT. If you're really worried you can insure against it. I would guess the premium would be hefty though.
Term assurance for 7yrs is cheap, even on large sums.
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