Inheritance Tax Give Away Before You Die?

[ab6262]

1 hour ago, poppet2 said:

Wouldn't that be the easiest solution to just give your loved ones their share of your inheritance before you die?

Surely that way, those who you leave your inheritance to, would avoid the 40% death duties.

yes if its liquid assets  just dont tell HMRC , cant do much about property though

[Annie Bynnol]

51 minutes ago, poppet2 said:

But would all the children who inherited, have to live there, both before a parent's death and then 7 years after?

Not all the children.

The same child would have had this as there permanent address for several years.

After 3 year the tax reduces by from 40 % to 32% then by 8% every year.

There are complications with these rules 

57 minutes ago, poppet2 said:

Does this allow you to ignore the 7 year rule?

No. Also the trust will not be allowed if the HMRC thinks it has been set up to avoid tax.

Most couples would set up a trust that passes half of the estate, held in a trust, to the inheritors on the death of one of the couple. On the death of the second parent(and seven years later, the trust would be dissolved with no tax payable).

The second parents' estate would be taxed as normal.

 

I am speaking as someone who did some finding out and then paid for a specialist to do the it properly.

[Annie Bynnol]

10 minutes ago, ab6262 said:

yes if its liquid assets  just dont tell HMRC , cant do much about property though

Get rid/change ownership  of the car and anything else you can.

Pleading ignorance does not work.

Anything that has left a trail e.g. cash in the bank, accounts, large withdrawal, interest, stocks shares, bitcoin, investments will be found if they want to, if you are caught on even the most minor transaction they will be all over your affairs like a rash. You may even be "invited" to pay more than you owe to pay costs and avoid criminal or fraud conviction. 

Take advice!

[Guest]

2 hours ago, Annie Bynnol said:

 

Charity is tax exempt as are political parties(!)

The politicians always make sure they are in with a chance don't they.

I would sooner burn it than give it to them.

[Waldo]

Don't forget kids, our glorious government (aka, robber dogs are us), need their pound of flesh to facilitate their dysfunctional and corrupt running of the country (in to the ground).

[Al Bundy]

2 hours ago, Waldo said:

Don't forget kids, our glorious government (aka, robber dogs are us), need their pound of flesh to facilitate their dysfunctional and corrupt running of the country (in to the ground).

Governments.......

 

 

[El Cid]

3 hours ago, Organgrinder said:

The politicians always make sure they are in with a chance don't they.

I would sooner burn it than give it to them.

You could give it to a care home, the NHS, local council or just give it to the local church.

[Waldo]

58 minutes ago, Al Bundy said:

Governments.......

 

 

Call my cynical, but anyone would think, essentially, they're all the same. Just a bunch of people in public office, who are more interested in serving their own interests (generally, the accumulation of wealth and power), than the interests of  people they supposedly represent.

Edited January 2, 2023 by Waldo

[poppet2]

On 02/01/2023 at 13:59, Jeffrey Shaw said:

The seven-year rule is subject to a sliding scale of amounts disregarded ("Taper Relief").

As far as I know- the rule does change from time to time!- Taper Relief exempts certain proportions of lifetime gifts which are Potentially Exempt Transfers. If one survives:

more than 6yrs but less than 7yrs: relief 80%

more than 5yrs but less than 6yrs: relief 60%

more than 4yrs but less than 5yrs: relief 40%

more than 3yrs but less than 4yrs: relief 20%.

Now that is interesting. But if you do survive the 7 years, no doubt you can start all over again and hope you live another 6 or 7 years so that your family don't have to pay the 40% inheritance tax.

[Annie Bynnol]

On 04/01/2023 at 14:09, poppet2 said:

Now that is interesting. But if you do survive the 7 years, no doubt you can start all over again and hope you live another 6 or 7 years so that your family don't have to pay the 40% inheritance tax.

   Do not assume that. I do not think you are allowed to slice up the estate unless it is through a Trust scheme acceptable to HMRC. They have the ability to decide that you or your inheritors have engaged in financial activity designed to avoid paying taxes.

   It really is a specialist area, I am an amateur left to deal with three separate estate 1 intestate, 1 error strewn will and 1 unacceptable Trust. For example you must pay rent/mortgage/costs to the beneficiaries/trust if you give you house away- and prove it. An offspring must pay rent/mortgage/costs before your death to claim to live in the house and get tax relief- and prove it. Gets even more complicated if the child is disabled.

   This is one area where HMRC are very good as precedence has been established in appeals and courts which means they are always right. They can and do check see records for up to 20 years after. Yes they do and they will  change the numbers and charge interest.

 

Jeffrey is exactly right on the taper relief figures but another way of looking at it is:

Time between date of gift and death is 0 to 3 years then the it will be 40% tax on gift over £325 000*

3 to 4 years  32%  tax on gift over £325 000.

4 to 5 years  24%  tax on gift over £325 000.

5 to 6 years 16%  tax on gift over £325 000

6 to 7 years    8%  tax on gift over £325 000

*Increases to £500 000 on house gifted to children.

So a £425 000 house will attract a tax of £40 000 but nothing if children inherit.

 

Currently the Tories are not expected to change these figures.