IHT & Gifts

[Anon45765]

Looking for some advice for my siblings & I. We will obviously do this with a solicitor/accountant but just wanted a little guidance as we can’t work it out.
DF has passed away. DM died 10 years ago.
House is worth approx £300k and he has savings & investments of around £100k so total estate of say £400k.
6 years ago he gifted myself and 2 siblings £100k each.
we know there is a 7 year rule for gifts and a threshold for his estate but what is counted “first” and who is liable to pay the IHT?
Thanks

Generally speaking if a spouse dies
Without using their nil rate band, this can be inherited by their surviving spouse. So your father may have a nil rate band of 325,000 *2 so 650,000.

as he is leaving his home the residence nil rate band of gbp175,000 will apply and he may also inherit unused allowance from your mother so it's possible there won't an iht charge to pay

The above is absolutely worth checking through if your mum didn't leave any assets (other than to your dad) or less than her full band.
In answer to your question on gifts 6 years ago, they are counted first but they get taper relief which adjusts the taxable gain downwards. But yes it is bonkers that they are still first.
But as pp said transfer of your mum's allowance may cover it

Thank you for your comments, we’ll definitely have a look into that, didn’t consider that we may also be able to use my mums allowance.

My FIL died and I completed the IHT and probate forms as Executor. As everything passed to him when MIL died we were able to claim double allowance which we could then fill in the simple IHT form. Take a look at the forms online, I recall there were questions about gifting money over the past 7 years, but it didn’t apply in our case. Any inheritance tax to pay will come out of his estate. I phoned the probate help office, they were very good in giving advise.

Your father will have a nil rate allowance of £325K + £175 for the main residence band. The gifts use up the IHT threshold first so that is the first £300K of your father's allowance. There is therefore no inheritance tax to pay on the gifts themselves. That leaves about 200K of his tax free allowance. The IHT due on the rest of the estate above this allowance would be at 40% and be paid by the estate but it sounds like you may be covered by your Mum's nil rate allowance and main residence exemption if she didn't use them herself (i.e. if she left everything to your Dad and they were married). The taper relief only applies if the gifts themselves are over the IHT threshold. When I did the probate for my aunt's will, she didn't get the double allowance as she and her partner weren't married (although had been together for 40 years).

If, when your mother died, everything was left to your father, then you should be able to utilise their maximum inheritance tax allowances (£325K + £325k) and both of their residence nil rate band allowances (£175k + £175k) = Total £1M before any inheritance is due - so on your fathers estate of £700k including gifts, there wont be any tax due.
My father died this year, 8 years after my mother, with a similar set of assets - house / savings etc and history of gifts within the preceding 7 years, and I used a solicitor to only obtain probate for me - it cost £3k but for me it was definitely worth it to not have to navigate all the forms for HMRC and taking away all the stress and worrying about it.