Gifted money

[bigsmell]

Mil has very kindly given us £10,000 out of her mother's estate. It wasn't left in the will. She is totally insistent that we have to pay tax on it.
Am I right in assuming that is only applicable if she dies in the next 7 years and her estate is liable for inherritance tax?

Also, we intend to use the money to pay off some debt, whilst using our own savings as a deposit for a house. Does anyone know if we are likely to need a letter from her confirm the source of the money for this purpose? I know we would if we were to use it as a deposit, but we won't be doing that as we already have cash in help to buy Isa's and will get 25% as first time buyers.
Mil will be ok with a letter, but is the type that gets stressed about little things, so we'd rather not ask unless totally necessary.

Thanks

If you mean loans and credit card debt then no you don't need a letter.
I believe you're right about the tax thing but check on the you.gov site

You're right about the 7 years.

Let her have a look at this.

Does she have other children and, if so, did she give them the same amount?

Thanks for the quick answers.

Yes luxury, the money will go on loans and a card. I won't bother her about a letter.

I was sure I was right about the tax! She was just so insistent that I started to doubt myself.
Sil has refused the money imperial, as they are better off than us and mil put together. I suggested mil could put something aside for sil's kids. I'm not sure if she did.

Do any of you know how long we should wait to apply for a mortgage after paying the debt off? Will it come off out credit scores right away, or should we wait a bit?

Get your bank statements in good shape to give yourself the strongest chance of success obtaining a mortgage. No overdraft or unnecessary payments going out. The details required now are quite unlike when I got my first house loan.
I'd have 6 months of tidy statements ready these days.

You can check your own credit files for any errors and to get an idea of your credit rating

Thanks luxury. Our bank stuff is fine - no overdraft and minimal outgoings. The only thing that would go against us is the credit card debt. That will now be all gone.
I'm just wandering how long it will take to show up as paid and closed on my credit file. Assuming that we should do that before applying for a mortgage.

Sure, pay off debts quick smart then check your credit reports soon after. I'd imagine after the next billing cycle but could be wrong.
If you use a mortgage broker they will advise you well. They will want to get you a home loan and will find you the lenders most likely to accept you. Cuts out a lot of stress

Thanks. A friend is a mortgage broker, so we will try him. I'm just trying I get as much as possible in order before going- to avoid too much time off work and costly return visits.
I'll pay everything off, then sign up for a free credit score thing to keep an eye on. Any idea which ones are best to use?

Experian and equifax are still the ones lenders look at. Clearview (I think it's called ) is quick and easy for your own overview. Think you can get free trials with the 2 I mentioned.
It's not a bad idea to check your reports periodically as mistakes do get made.

If she dies within 7 years and her estate is over £325,000 (if she's a single person) there may be tax to pay. However this is tapered on the anniversary of the gift (I think).

Thanks letitrain