one off cash gift prior to death

[cashgift]

can a person make a one of cash gift of 100,000 sterling prior to dying ?
My brother receive a lump sum and gifted this to my father .. my brother died a few weeks later. I have read that a person can give a one off cash gift of up to £100k without it being liable for inheritance tax. This was in a leaflet giving advice on inheritance tax by the tax office ... its looked quite straight foward, but now the tax are trying to includ it for inheritance tax calculations

[Nigel Lord]

cashgift

If an unfettered gift is made during an individual's lifetime it is treated as a Potentially Exempt Transfer (PET). This means that it will leave the donor's estate if they survive for seven years. If the donor dies during the seven year period some, or all, of the gift is added back to their estate in computing its value for Inheritance Tax (IHT) at death. This is reduced 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%

Unfortunately, in your brother's circumstances, it is likely that all of the gift will be added back to his estate in computing its IHT value.

I would comment that a gift to an older generation would be most unusual in IHT planning strategies. If you family needs assistance in making the affairs of your family and brother's estate as IHT efficient as possible, please do not hesitate to contact me.

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

[uconnolly@glasshouse]

Is there a financial limit of the amount of cash that can be transfered from parent to child under the 7 year PET scheme ?