Good video and very helpful. My parents have an estate in excess of £1m and are looking to gift me £500k. Do both of them have to live past 7 years to make it tax exempt and what happens if one dies? What happens if I spent it all and they both died within 3 years - I’m guessing the taxman would still want payment from me? People could come unstuck with this so would be good for more about these sorts of things if you did a follow up video. Thanks
Hi, Great video thanks. Quick question, if you use the 325k allowance within the 7 year rule does this just mean you don’t have that allowance once the person gifting has passed away? Or is there a fresh 325k allowance? Thanks
My husband left all his estate to me when he died so as I understand it I am allowed to have £650,000 before being liable for inheritance tax. George Osborne then added the family house to that amount making the tax free amount £995,000. I am about £200,000 under that amount. If I gave my two children about £50,000 each now while I am under, if my house went up in value say in three years to take me over the £995000 threshold would inheritance tax be due on what I had given them?
These gifts will be seen as potentially exempt transfers PETs and will form part of your estate for 7 years. After this point there will be no inheritance tax payable.
Thanks for this Kimberley. Is it the case that if I make a gift to a trust, then if I make any more gifts above £250 (apart from gifts of the £3,000 allowance and gifts out of income) to a person or a trust in the next 7 years, then it cause the 7 year rule to start again on the original gift to the trust?
There are some specific timings with gifts into Trusts and the 7 year rule. I would recommend getting advice to ensure you don't fall into any traps and gifts fall within the 7 year rule. Some lifetime transfers will incur inheritance tax depending what you are transferring so there are a few pitfalls to avoid.
The executors of the estate are required to review this as part of valuing the estate and making the appropriate reports to HMRC. The PETs can be seen on bank transactions or any notes that have been made for inheritance tax purposes.
The 50% from the person who did not meet the 7 year rule would be clawed back. However, the tax charge will depend how many years through the period would determine the tax on the 50% of the gift.
How much inheritance tax if half of the property was given to charity? The person gave the gift died after 2 years? Can we reduced more because of charity?
Hi, if I gift my son a house that has been rented out, and he moves in, as his main residence, then sell the house in a year or two, will he be charged with CGT or Inheritance tax? Will he be able to use the Private residence relief and the main residence relief to mitigate the amount taxable? thanks for your advise.
He will be able to claim PPR most likely, however on gifting the property you will be liable to CGT and it falls within inheritance tax rules if you don't survive for 7 years following the gift. Your son's position is quite simple in this example. The complicated element is yourself as you will be liable to taxes although have received no funds to enable you to pay them.
£325,000 not away more, wait until Oct be £100,000 thanks Labour. What kind of document would this be in, I cant say now my mum gifted it to me 7 years ago Im sur ethere is some document or have to write some where to get it signed off.
For the 7 year rule you would be looking at legal paperwork for a property, bank statements would show when a cash gift was actually received. There is no specific document and just evidence which supports what has happened. Where it is an asset owned and registered somewhere it needs to be properly registered with the new owner.
@@kimberleyshapcottpropertytax I see, so if that house was left in a will that doesnt count. My mum is leaving me her house, an account said it would be better to take equity out, but I read you have to pay 5% a year plus you need to pay that back once house is sold, is that right?
Good video and very helpful. My parents have an estate in excess of £1m and are looking to gift me £500k. Do both of them have to live past 7 years to make it tax exempt and what happens if one dies? What happens if I spent it all and they both died within 3 years - I’m guessing the taxman would still want payment from me? People could come unstuck with this so would be good for more about these sorts of things if you did a follow up video. Thanks
Leave this with me and I’ll do some examples of the practical application of inheritance tax on the channel.
Hi, Great video thanks. Quick question, if you use the 325k allowance within the 7 year rule does this just mean you don’t have that allowance once the person gifting has passed away? Or is there a fresh 325k allowance? Thanks
You won't have it when they pass away if has already been used.
My husband left all his estate to me when he died so as I understand it I am allowed to have £650,000 before being liable for inheritance tax. George Osborne then added the family house to that amount making the tax free amount £995,000. I am about £200,000 under that amount. If I gave my two children about £50,000 each now while I am under, if my house went up in value say in three years to take me over the £995000 threshold would inheritance tax be due on what I had given them?
These gifts will be seen as potentially exempt transfers PETs and will form part of your estate for 7 years. After this point there will be no inheritance tax payable.
Thanks for this Kimberley.
Is it the case that if I make a gift to a trust, then if I make any more gifts above £250 (apart from gifts of the £3,000 allowance and gifts out of income) to a person or a trust in the next 7 years, then it cause the 7 year rule to start again on the original gift to the trust?
There are some specific timings with gifts into Trusts and the 7 year rule. I would recommend getting advice to ensure you don't fall into any traps and gifts fall within the 7 year rule.
Some lifetime transfers will incur inheritance tax depending what you are transferring so there are a few pitfalls to avoid.
Hi, how would HMRC know about PETs? Does someone crawl through the bank transactions of family members?
The executors of the estate are required to review this as part of valuing the estate and making the appropriate reports to HMRC. The PETs can be seen on bank transactions or any notes that have been made for inheritance tax purposes.
If parents gift a jointly owned second property to daughter and only one parent survives the 7 years does any PET return to estate?
The 50% from the person who did not meet the 7 year rule would be clawed back. However, the tax charge will depend how many years through the period would determine the tax on the 50% of the gift.
How much inheritance tax if half of the property was given to charity? The person gave the gift died after 2 years? Can we reduced more because of charity?
If 10% or more of the estate is gifted to charity then this will reduce the inheritance tax rate to 36% instead of 40%.
Hi, if I gift my son a house that has been rented out, and he moves in, as his main residence, then sell the house in a year or two, will he be charged with CGT or Inheritance tax? Will he be able to use the Private residence relief and the main residence relief to mitigate the amount taxable? thanks for your advise.
He will be able to claim PPR most likely, however on gifting the property you will be liable to CGT and it falls within inheritance tax rules if you don't survive for 7 years following the gift. Your son's position is quite simple in this example. The complicated element is yourself as you will be liable to taxes although have received no funds to enable you to pay them.
£325,000 not away more, wait until Oct be £100,000 thanks Labour. What kind of document would this be in, I cant say now my mum gifted it to me 7 years ago Im sur ethere is some document or have to write some where to get it signed off.
For the 7 year rule you would be looking at legal paperwork for a property, bank statements would show when a cash gift was actually received. There is no specific document and just evidence which supports what has happened. Where it is an asset owned and registered somewhere it needs to be properly registered with the new owner.
@@kimberleyshapcottpropertytax I see, so if that house was left in a will that doesnt count. My mum is leaving me her house, an account said it would be better to take equity out, but I read you have to pay 5% a year plus you need to pay that back once house is sold, is that right?