Please can someone offer advice about IHT + CGT. Thanks.

[mark1961uk123]

Unfortunately my Dad has died and I need to fill out some IHT forms. In particular, I need to understand if Capital Gains Tax (CGT) is relevant to my situation. Thanks.

I've been on incapacity benefit for a long time due to a serious illness, and over the last 6 years, I received "hand outs" from my Dad. These have been about 7K a year. The hand outs were taken from his ISA "stocks and shares" savings accounts. These yearly hand outs were a mixture of a wodge of cash (eg £1500), him paying for hobby-based stuff on ebay using his credit card for me to keep, and also him using internet banking to pay off debts on my credit and debit card. A couple of times, I also received cash hand outs of about 4K to pay for 6 months of "up front/in advance" private housing rent.

I don't think that I need to worry about IHT. The reason is that Dad's house is worth 300K, and his remaining savings are worth 150K. That's 450K in total. I realise that the IHT nil rate band is only 325K, but I think I can double this nil rate band to 650K (2 x 325 = 650) because I think that I can combine my Dad's deceased wife's (my mother) IHT nil rate band as well as his own IHT nil rate band. Is this correct?

Looking again at the "7K yearly hand outs" of 6 x 7K = 42K. (The 6x part is for 6 years.) If I add on a bit more because of the aforementioned housing rent money hand outs, I'll round it up to a total of 50K over a 6 year period. I understand that no IHT is due on gifts of up to £3000 a year. So for 6 years that's a total allowance of 6 x 3K = 18K. To keep this simple, I'll ignore the "taper relief" that's calculated on older dated gifts. To keep this simple again, I'll estimate that about 30K of hand outs are due for potential IHT. (I got 30K by doing 50 - 18 = round this up to say 30.)

If I add this 30K to the 450K already calculated above for the value of the entire estate, that total (480K) is well under the 650K "combined" IHT nil rate band. Therefore, I don't think I need to worry about paying any IHT. Is this correct?

However, what about capital gains tax? Looking at the history and nature of the hand outs I received, do I pay any CGT? I mentioned earlier that my Dad bought me stuff on ebay. This stuff falls in to the category of computer hardware, for a long term hobby of mine. The total cost of these items was probably about 12K, although their resale value is probably closer to 5K!

Thanks very much for any comments, I really appreciate any assistance.
Best regards from Mark.

BTW, I think I got that aforementioned 6x3 = 18K "gift allowance" calculation wrong. Because the hand outs money came from Dad's savings, and not from his income, there may be no eligible allowance at all!

[pawncob]

If your mother's lifetime allowance wasn't used then the IHT allowance available would be £650k and the rest of your questions are irrelevant. Gifts to you are not subject to CGT since there was no disposal, he merely gifted items to you.