Advice sought on CGT/income tax and inheritance

[Dandy]

I'd be very grateful for some guidance. I haven't found quite the right answers in other posts. My aunt (whose total assets of savings, property and furniture/jewellery are approx.£170,000) would like to give cash lump sums to her two children, approx. £20,000 each, before she dies, by cashing in a range of savings and investments (shares, PEPs, ISAs, premium bonds). She is unlikely to live more than a few more years due to progressive illness, and may soon need full-time nursing care. Is there any tax for her to pay on what she gives? If CGT, how is this calculated? Also, would her children be liable to pay any kind of tax? One child is currently a taxpayer in France, though still has British nationality, and is liable to return soon to live in UK. The children may eventually use the money to help pay for their mother's nursing care, so would, in a sense, be custodians of the money for the time being. If their mother decided, alternatively, to leave the money to her children upon her death, would there likewise be tax implications for the children? Very many thanks for all thoughts...

[Peter D]

I am sorry to hear of her situation. However any gifts from her estate will not attract any IHT or any other tax as she is below the threshold. However if she goes into LA care then the LA will regard these gifts as deprivation of estate so will ignore the gifts for calculating care fees. These fees will apply until her estate is reduced to circa £22,000 then the LA will pick up all the fees. Regards Peter

[Dandy]

Thank you, Peter, for your advice. Some posts on this forum state that there is a limit to the amount of money my aunt could give in any tax year. Is this the case in relation to my aunt, as far as you know the facts? May I also ask how would the LA know that she had given money away, given that it may not come from her bank account but from investments? Also, do you know whether her children would be liable for any tax upon receiving the money? Any further advice gratefully received! Thanks.

[Peter D]

There is alimit of £3,000 per FY outwith any IHT complication. however £20,000 is not a problem if she lives more then 7 years. The gifts are not earned income so no tax involved. LA's can be quite thorough and any cashed investment will transfered through her bank account so it could be spotted. Regards Peter

[Dandy]

Thanks again. Sadly my aunt is very unlikely to live for another seven years, so perhaps there are tax implications for her giving...?