Gifts and inheritance tax/deprivation of assets

[nationaltreasureDA]

My son is getting married next month. My very elderly mother would like to give him money as a gift. Google suggests that she can give him £2.5k as a wedding gift. I can also see that she can give £3K a year in gifts; however, I can't work out whether this can be given in addition to the £2.5K. Can anyone advise? We obviously want to stay within the permitted limits for gifts.

I think you may be conflating two things

• gifts and whether they could be subject to inheritance tax
• Deprivation of assets which relates to giving away money in order to avoid spending it on care fees

for the first, the rule is that you can give gifts of £3k per year total (ie you can’t give £3k each to 3x grandkids, you could only do £1k each) plus £2,500 to any grandchild getting married, without these being subject to inheritance tax if you die within 7 years. You can also give gifts you can demonstrate are from income rather than savings - eg if your income is £1.5k per month but you only spend £1.3k per month you could give away another £200 per month from surplus income.

Deprivation of assets has no limits of amounts or time - it’s more about intent and likelihood of needing care. If your mum is very elderly and frail and has few other assets then giving your son this money could be seen as such if she needs care in the near future. If she has plenty of other assets to pay for care it is less likely. But there aren’t really any hard and fast rules. It would likely be thought reasonable to give her grandson a wedding gift, but if it were very substantial and she needs care very soon and she doesn’t have any other means to pay, the local council could try to claw it back

@PosiePerkinPootleFlump Thank you - that is helpful

You can give away as much money as you like. It's only an issue if there's inheritance tax to pay at a later date. Most estates in the UK do not come under the inheritance tax rules so pay no tax, should your mother die in the next 7 years a large gift could only count should her estate fall within the remit. As for deprivation of assets this is usually a large asset such as a house being sold to deliberately avoid payment of care fees and a wedding gift to a grandchild would seem reasonable.

She can give as much as she likes. If her estate plus the gift is over the IHT threshold, her estate (not your son) might need to pay tax on the value of the estate + the gifts if they / the estate assets don’t fall in the exemptions.

It’s not a reason not to give a larger amount since the tax would be due whether it’s in your son’s bank account or his grandmother’s when IHT becomes relevant. The exemptions just give a relatively small amount of money where tax is not due.

@PosiePerkinPootleFlump has explained deprivation of assets.