Implications of One Off Payment to ex-wife

[Perfect Frod]

Can anyone tell me what the taxation implications would be to my ex-wife if I gave her a lump sum to, say redeem her mortgage or if I just paid it off.

Ian

[Nigel Lord]

Ian

This would be treated as a Potentially Exempt Transfer (PET) for Inheritance Tax (IHT) purposes. If you survive for 7 years the gift will fall outside your estate. If you die within 7 years part of the gift may fall outside your estate in accordance with the following table:

0 - 3 years = 0%
3 - 4 years = 20%
4 - 5 years = 40%
5 - 6 years = 60%
6 - 7 years = 80%
7 years + = 100%

There are no other tax imlications.

Nigel Lord
Lord Associates
Taxation & Business Consultants
Caxton House
Old Station Road
Loughton
Essex, IG10 4PE
020 8418 9101 & 07769 931852
mail@lordassociates.co.uk