Gift and Inheritance Tax

I recently received an unexpected inheritance from Germany that was given to me with the intention of sharing it with other members of the family . German taxes have been paid on the inheritance. Three family members reside in the UK and one in Germany. I understand that the payments made to family in UK will be seen as gifts and will affect my inheritance tax allowance if I die within 7yrs. One family member is German and he will pay tax on the gift in Germany. However will my inheritance allowance be likewise reduced even though the gift is to a citizen of another country. Thanks

I'm a UK citizen/resident who pays tax as an employee via PAYE. I'm considering making a cash gift above £3,000 to a sibling to provide them with a nest egg and reduce the size of my estate for Inheritance Tax reasons. I understand the first £3,000 (per year) of any gift is tax free and that if I die within 7 years of making a gift, on a tapering scale Inheritance Tax would be payable on the gift. My executor would need to declare gifts. I also understand my sibling would not need to pay tax on the gift but may need to on any income derived from it. What I can't find out is whether I need to declare making the gift at the time I make it and, if I do, how I declare it. Help appreciated.

Hi
You do not need to declare this as there is no tax relief due for you on this.
However, it should be noted somewhere for your own records as it will need to be taken into account as part of your estate under the 7 year rule for inheritance tax.

Dear HMRC, If I receive a gift of more than tax free amount of £3000 from my elderly brother, but his whole estate is below the inheritance tax threshold, does he or his estate have to pay any tax on the money he gifted to me?

I am a UK citizen living abroad long-term and paying tax in country of residence, not in UK. I have 105,000 GBP in an investment site and I need to send that money back to my UK bank account within the next 2 months. The money was originally a gift from my parents. Only 5,000 GBP is interest from investments. Will there be any tax implications if I send the money back in one lump sum?

Hi Davidnormanpage,
No. It will still need to be included as part of your estate as part of the 7 year rule.
Thank you, 
 

Hi,

YTT72 TRT ,

 

No. The gift over £3000 would only be applicable if your brother was to pass away within 7 years of giving you this to be include in the value of the estate  . Thank you

Dear HMRC, My question is about receiving a gift from a relative who lives abroad (British national but non-resident) for more than £3000 to help me buy a house. This would be either a lump sump or over a few payments. I am a UK resident but EU national and this relative is not a first degree relative. Will this fall under the inheritance tax 7 year rule? Ie if they give me a lump sum and they live beyond 7 years then I will not need to pay any inheritance tax but if they died within 7 years then I would need to pay inheritance tax. Or would I need to pay an other form of tax upon receiving this gift? I would appreciate any clarification of the situation above. Thank you.

Hi,

There are no Income tax implications on the receipt of a cash gift unless the cash gift generates interest or dividends. These would then potentially be subject to tax.

Tax on savings interest
Tax on dividends

You would not have any Inheritance Tax issues with this gift, as the individual is not UK resident.

Thank you.

Hi I am looking for some clarification on HMRC rules regarding the gifting of monies and IHT….. My parents-in-law are suffering from various old age related issues, including dementia. They are considerable remote from us and approaching the point where they are unable to care for themselves. We are thinking that we will need to look after them at our house. In order to do this they are considering selling their house and gifting the proceeds to us such that we can build an Annexe on our property for them to live in (Rent free). Can you clarify the HMRC rulings in regards to this proposed action and whether or not their gifting of the house sale funds would … 1. Give rise to any Capital Gains tax implications – their current house is their sole residence 2. Be considered as a “Gift with Reservation” as they intend to live with us (rent free) in the Annexe we build on our property using the funds they gift from the sale of their property. The Annexe would be owned by us. The sale proceeds would not exceed £325,000. As the monies would be gifted effectively by both parents (jointly) … 1. Does an IHT consideration in respect of the monies gifted ONLY arise on the death of the last surviving parent? 2. In our scenario am I right in assuming that worst case, should they die within a year of two of this the gifted monies would be considered as part of their estate and IHT would be due only on the part that exceeded the IHT threshold, currently the threshold is higher than the gift expected. 3. If subject to an IHT calculation is the threshold value to apply determined at the time of passing or is it that which applied when the gift was made? In other words what happens if after we accept the gift the IHT threshold drops to Nil and they die within a year. 4. The 7 year rule calculation, is this determined from the time of passing of the last surviving parent i.e. what happens if one parent dies within a year and the other lives for another 10 years? Many thanks for your help in clarifying the HMRC rulings in this area.

Can you please clarify Inheritance tax - If my parents transfers less than £325,000 ( Threshold for inheritance tax ) via bank transfer from their account with no property estate being transferred to my name will i have to pay inheritance tax. There's normally no Inheritance Tax to pay if either: the value of your estate is below the £325,000 threshold. Is £325,000 threshold applicable for both online transfer same as estate transfer or there are different rules for inheriting this.

Hi
Please refer to How Inheritance Tax works: thresholds, rules and allowances or telephone 0300 123 1072

Hi Edward,
Please refer to:
How Inheritance Tax works: thresholds, rules and allowances
Or please contact the helpline:
Inheritance Tax: general enquiries
Thank you. 
 

Hi HMRC Admin 25. I tried to call the general enquiries line as suggested. However I get an automated message telling me that the number is no longer in use. What is the right number to call please. Can you also update the web page to list the correct number. Thanks

Hi HMRC Admin 25. I managed to speak to someone on the helpline. However I am not sure that they advice received is accurate. If I refer to your webpage: "How Inheritance Tax works: thresholds, rules and allowances". It would infer that if you die within 7 years of gifting, the amount of tax to pay depends on if inheritance tax is due and when the gift was given. If the persons estate is minimal such that the £325,000 allowance is hardly consumed the remainder would offset the gift amount given right? Day1: Gift 250,000 Day2: Death. Remaining estate is valued at 75,000 IHT allowance remaining: 325,000 - 75,000 = 250,000 Therefore, gift on Day1 is NOT subject to any IHT liability, it is tax free. Is that correct?

Hi,
Unfortunately we are unable to answer Inheritance Tax questions on this forum. You will need to contact our Inheritance Tax team for advice.
Thank you. 

My father in law wishes to gift his four sons some money. His whole estate is valued at under £250,000. Would inheritance tax be due on these gifts, and how much can he gift each person per year?

Hi,
Please see guidance here:
Work out Inheritance Tax due on gifts
Thank you.