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Original poster

Am I being daft or have fiancée's parents misunderstood inheritance tax?

42 replies

countrywalks1 · 01/12/2021 23:24

So my almost in laws often pay for my fiancée's stuff, uni etc. They've been dealing with my almost nan in law so I think are now more clued up around inheritance tax etc.

My fiancee is moving for a few months to another city for work, and they kindly offered to cover half the rent whilst I stay at our own place (I've always paid my half).

However they want to pay the money directly to the landlord, as opposed to transfer to my fiancee who can then pay as normal. I suppose it makes no difference, but my understanding is that they can do whatever they like with their money, so also could do a lump transfer across to my fiancee rather than spoon feed to the landlord.

I think they think they might get taxed if they do the lump transfer route however. Am I wrong/have I misunderstood something?

OP posts:
ittakes2 · 02/12/2021 09:20

It doesn’t save them tax - it saves your partner tax if they were unfort to die within 7 years.

BaronessBomburst · 02/12/2021 09:25

I really, really want to know your motive for asking this.......

ittakes2 · 02/12/2021 09:28

If you were my daughter-n-law to be I would be tying my son’s inheritance up in a trust fund do you couldn’t get to it. Honestly you are so over invested in their finances its concerning. You’ve been told it’s good business sense and yet you still seem to be trying to find an angle that they are being dodgy. If you are so concerned politely decline their offer and pay the extra yourself.

saraclara · 02/12/2021 09:52

They're right. If I help my kids out, I do it by paying for something directly. That way there is no link to them, should anyone go through my finances.

I'm thinking of helping my daughter with childcare costs. If I put the money into her account, then it's clearly a gift to her. If I pay the nursery direct, well it's just a bill that I've paid, and less likely to be questioned if I die in the next seven years.

There's no question of me not trusting her to use the money as intended. It just makes it less likely that it will be looked at from an IH perspective.

They're being sensible.

youvegottenminuteslynn · 02/12/2021 10:00

@saraclara

They're right. If I help my kids out, I do it by paying for something directly. That way there is no link to them, should anyone go through my finances.

I'm thinking of helping my daughter with childcare costs. If I put the money into her account, then it's clearly a gift to her. If I pay the nursery direct, well it's just a bill that I've paid, and less likely to be questioned if I die in the next seven years.

There's no question of me not trusting her to use the money as intended. It just makes it less likely that it will be looked at from an IH perspective.

They're being sensible.

This. Can you see this OP? It's not sneaky, it's savvy. They aren't saving themselves tax by doing this, they're saving your boyfriend being taxed should they pass away within the next seven years. They're doing this to help your boyfriend now, rent wise, and in future, tax wise.

It's THE best way for them to help your boyfriend and totally by the book. Why don't you want them to do that?

OverTheRubicon · 02/12/2021 10:33

Do you think that maybe they're doing it to keep their money out of the hands of his grabby fiancee? Hmm That would be my take, given you're posting about this at all.

Additionally, as others have said, plenty of people in their 50s will unfortunately die within 7 years, and they are saving him (not themselves) a potential future tax bill.

In your place I'd a thank you gift, or failing that, at least get your nose out.

Gearedtoyou · 02/12/2021 10:47

I think they're probably using IHT as an excuse and they actually just want to make sure the money is spent on rent.

It makes the admin of it easier for you too.

BeeLady15 · 02/12/2021 13:52

I’m in Ireland and things like this - paying rent or other bills for an adult child or letting them live rent free in a house they own do make up part of the total amount allowable between parent and child and should be declared as such. I know many don’t but in the strict sense of the law it should be. Therefore, if the situation is the same in the UK, the OP is right. Her partners parents are trying to hide these transaction from the tax man. It does have an implication for her if in the future they’re married and jointly assessed for tax and receive further monies/inheritance. However, as I said, I’m in Ireland so I might be off the mark with the situation in the UK

MaggieFS · 02/12/2021 14:30

@BeeLady15

I’m in Ireland and things like this - paying rent or other bills for an adult child or letting them live rent free in a house they own do make up part of the total amount allowable between parent and child and should be declared as such. I know many don’t but in the strict sense of the law it should be. Therefore, if the situation is the same in the UK, the OP is right. Her partners parents are trying to hide these transaction from the tax man. It does have an implication for her if in the future they’re married and jointly assessed for tax and receive further monies/inheritance. However, as I said, I’m in Ireland so I might be off the mark with the situation in the UK

People have already explained the situation in England and it's not the same though Hmm

ivykaty44 · 03/12/2021 07:15

Alwayscheerful. was coming on to say the same as this poster

Alwayscheerful · 03/12/2021 07:47

@ivykaty44
Agreed.

I would say the parents fully understand inheritance tax.
Inheritance tax is not relevant in this case. Regular payments for rent and out of income are within the rules and not subject to inheritance tax.
Op should deal with her own finances and make no comment on her partners parent's generosity.

KeyboardWorriers · 03/12/2021 09:06

They are paying his rent, beyond that I am not sure it is any of your business.

It makes sense for them to pay it straight to the landlord surely. I would want to in these circumstances as well. If they pay a lump sum they would risk you /your fiance not paying it on to the landlord

Skysblue · 03/12/2021 10:01

Sounds to me like they’re sensibly trying to keep the tax position as simple as possible, and the only person making it weird is you.

Very generous of them. Maybe focus on that.

Cocomarine · 04/12/2021 15:45

You clearly have no idea how tax works - thinking a lump sum makes a difference - so I think it’s quite bizarre that you’re sticking your beak into your girlfriend and her parents’ business!

Your girlfriend sounds like she could with learning to stand on her own two feet, too.

Aubree17 · 23/12/2021 20:26

Other point is that if the gifts are from
Income (as opposed to reducing their capital estate) IHT shouldn't apply to the gifts.

LethargicActress · 23/12/2021 20:33

Maybe they don’t want to gift it out of their income, and they’re funding this generous gift out of their savings, or maybe they’re cashing in an investment to do it.

dizzygirl1 · 24/12/2021 06:16

My friend's dad died suddenly this year and she is sorting out the inheritance... having to find the evidence from a family loan years ago and what has been paid back... my friend now would much rather it had all been documented. Your future in laws are definitely trying to help their son, to not lose out or have extra stress and pressure if they were to die sooner than 'expected'

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