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Original poster

money left to me in a will- liable to inheritance tax?

19 replies

vannah · 12/04/2011 21:51

My parents (both still here but dad has cancer) have saved some money for my sister and I, it might be around 75k each. They left their property to my brother and transferred it into his name upon his request about 8 years ago so it will I believe be exempt from I.Tax.

Will I have to pay inheritance tax on 75 thousand? It's the only savings they have and will help me fund my childrens uni fees plus go towards my retirement..
I really dont want to pay tax on it as its not a great amount...any advice?
thankyou

OP posts:
Kandinsky · 12/04/2011 22:01

No. The limit is in the region of £325K before there is any inheritance tax liability.

K999 · 12/04/2011 22:03

There are thresholds and rules but I think you wont have to pay IT on that amount. Check the Inland Recenue website. Your brother will be exempt as they gifted their property to him and iirc it's past the time limit. Smile

Original poster
vannah · 12/04/2011 22:03

Gosh, thanks for that Kandinsky. A relief!

OP posts:
Original poster
vannah · 12/04/2011 22:12

thanks k999. Im not v good at googling but I keep coming up with the following :

'Some cash gifts are exempt from tax regardless of the seven-year rule. They include: wedding gifts of up to £5,000 to each of your children; wedding gifts of £2,500 to each grandchild, and wedding gifts of £1,000 to anyone else; other gifts of up to £3,000 a year (plus any unused balance of £3,000 from the previous tax year); gifts of up to £250 each to any number of people each year; gifts to charities, the National Trust, national museums, the main political parties and most registered housing associations

OP posts:
K999 · 12/04/2011 22:15

That sounds about right but since you don't hit the threshold, you don't have to worry! Lucky you by the way! Enjoy! Smile

Original poster
vannah · 12/04/2011 22:20

Great thankyou ...and phew. I will actually sleep tonight!

OP posts:
Piffle · 12/04/2011 22:28

The house might be included in the estate still
How was it gifted?

Piffle · 12/04/2011 22:30

More useful links
Inheritance Tax when passing on property
For Inheritance Tax purposes, giving your home away is treated as making a gift. The rules about passing on property are complicated, so it's a good idea to seek legal advice.
There are two things about gifts to be aware of when passing on property:
Seven-year rule. You can make an outright gift of your home to someone, no matter what it's worth, and it will be exempt from Inheritance Tax if you live for seven years after making the gift. This is known as a potentially exempt transfer (PET).
Gifts that you continue to benefit from. If you give your home to your children with conditions attached to it, or if you continue to benefit from the home yourself, this is known as a 'gift with reservation of benefit' and the gift won't be exempt from Inheritance Tax, even if you live for seven years afterwards.

Original poster
vannah · 12/04/2011 22:33

As far as I know Piffle my brother insisted that the family home be put into his name much to my father's objections (he didnt and still doesnt know about inheritance tax). Dont think it was gifted.

OP posts:
K999 · 12/04/2011 22:36

He may still be liable then. Best ask a lawyer. Smile why did they agree to do this if you don't mind me asking?

Original poster
vannah · 12/04/2011 22:38

just to try to avoid the inheritance tax using the 7 yr rule...

OP posts:
MadamDeathstare · 12/04/2011 22:38

This reply has been deleted

Message withdrawn at poster's request.

Original poster
vannah · 12/04/2011 22:40

thats what I would have thought, so thats capital gains tax isnt it?

OP posts:
fortyplus · 12/04/2011 22:41

If your parents gifted the house to your brother 8 years ago then he won't have to pay inheritance tax. BUT if they continued to live in the property they are considered to be receiving benefit in kind and should be paying tax on the amount they would have had to pay in rent for the property. So there is a tax liability on the estate, but not inheritance tax. You need professional advice.

Original poster
vannah · 12/04/2011 22:43

thankyou fortyplus, got some numbers jotted down...

OP posts:
CarrotsAreNotTheOnlyVegetables · 21/04/2011 20:58

Inheritance tax exemption limits apply to the estate of the deceased, not to the beneficiaries.

Any inheritance tax payable on the value of the estate is paid by the executor before distributing the assets. It is paid out of the "residue" of the estate after specific gifts are paid over.

Transfers of assets to spouses are exempt from IHT.

Celibin · 22/04/2011 23:13

No we went through this . Threshold is somewher round £325.00 /£35000 mark.

bleedingstill · 22/04/2011 23:20

sad to hear about your dad's cancer

ChablisLover · 23/04/2011 10:26

Do your parents still live in the house?
If so, it could be a gift with reservation of benefit and therefore still liable to Inheritance tax as it would be still be included in their estate unless they paid your brother a full market rent for living there.

Remember, that if your parents have wills they will come into play in this also.

Spousal transfers are exempt and there is a newish rule about the transfer of unused nil rate bands on the death of the first spouse

The estate will usually pay the inheritance tax but there can be cases where the beneficiaries pay the tax.

I would agree with fortyplus - you really need professional advice with all the facts and figures as this area of tax can be complicated and it can be easy to get it wrong.

Sorry to hear about your dad

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