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Not Clear on the 325k Assets Threshold and 7-Year IHT Rule

trnd777
Posts: 2
Joined: Thu Oct 12, 2017 10:09 am

Not Clear on the 325k Assets Threshold and 7-Year IHT Rule

Postby trnd777 » Thu Oct 12, 2017 10:20 am

Am an UK expat nearly 20 years outside UK and still retain only UK citizenship.
Both parents born in UK and resident and working there all their life.

I'm currently not tax liable in any overseas country, as I have since moved on from my long-term job residency country and currently not working where I am located.

I'm unclear on any IHT tax liability that I might attract if my parents gifted me 85,000 pounds towards property. I know about the 7-year diminishing IHT tax percentage rule but not sure how it relates to total assets of parents.

Parents joint and separate total assets are less than 325,000 pounds, so does that mean by them transferring and declaring the purpose of gifted money of 85,000 towards property this transfer would be exempt from the 7-year rule regarding the date of transfer of money to any date they might pass away in less than 7 years based on total assets under 325k ?

AGoodman
Posts: 166
Joined: Fri May 16, 2014 3:47 pm

Re: Not Clear on the 325k Assets Threshold and 7-Year IHT Rule

Postby AGoodman » Thu Oct 12, 2017 11:10 am

1. Only your parents' residence/domicile is relevant here.
2. (As you thought) If your parents both survive 7 years then the gift will become irrelevant.
3. If one of them did not, then their part of the gift would be taken back into account when calculating their estates for IHT.
4. However, if their total aggregate estate (ie between them) is less than £325k then there is no chance their estates will be subject to IHT. They will have an aggregate nil rate band of £650k between them before you even have to consider the additional residence nil rate band of up to £350k (£175k each).
5. It is difficult to see any way in which IHT could be payable at these values. There is no need (or indeed benefit) to declaring the purpose of the gift, they can just pay it to you.

trnd777
Posts: 2
Joined: Thu Oct 12, 2017 10:09 am

Postby trnd777 » Thu Oct 12, 2017 2:08 pm

AGoodman wrote:1. Only your parents' residence/domicile is relevant here.
2. (As you thought) If your parents both survive 7 years then the gift will become irrelevant.
3. If one of them did not, then their part of the gift would be taken back into account when calculating their estates for IHT.
4. However, if their total aggregate estate (ie between them) is less than £325k then there is no chance their estates will be subject to IHT. They will have an aggregate nil rate band of £650k between them before you even have to consider the additional residence nil rate band of up to £350k (£175k each).
5. It is difficult to see any way in which IHT could be payable at these values. There is no need (or indeed benefit) to declaring the purpose of the gift, they can just pay it to you.


AGoodman, thanks for all that succinct info.

Lastly, would such a gift payment of 85,000 be at risk from income tax charged to myself or any other not so obvious tax on such a lump sum transfer from my parents ?

maths
Posts: 6940
Joined: Wed Aug 06, 2008 3:25 pm

Re: Not Clear on the 325k Assets Threshold and 7-Year IHT Rule

Postby maths » Thu Oct 12, 2017 3:51 pm

Lastly, would such a gift payment of 85,000 be at risk from income tax charged to myself or any other not so obvious tax on such a lump sum transfer from my parents ?


No. As AG poins out, any such gift falls within the nil rate band and hence no IHT even if death occurs within 7 years of making the gift.

There are no other relevant UK taxes.


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