Gifts to Help With Living Costs

[Barbara0]

While my mum was alive, she gave my brother various sums of money to help with his living costs.

He was unable to work to support his wife & 2 young children while suffering from heart failure for several years - he used an LVAD heart pump and then finally received a heart transplant in 2017.

Over the last 7 years, the gifts to my brother amount to around £50,000 in total, given at various random different times.

Does anyone know how much of this might be IHT tax-exempt? Is there a specific form or schedule for this type of exemption?

The amounts were not given at regular intervals, just each time he & his family ran out of money.

Thank you

[pawncob]

If they can be classed as gifts from income, then they'll all be exempt from IHT.
Otherwise, assuming the state is chargeable to IHT, some gifts may result in a liability.
https://www.gov.uk/inheritance-tax/gifts

[AGoodman]

Step 1: Is the estate taxable anyway? If the £50k were added back, would the total chargeable estate be greater than the nil rate band, residential nil rate band and (if your mother was a widow) the transferred nil rate bands which could double the original figures to up to £900k.

Step 2: There is a £3,000 p.a. exemption for gifts which might reduce the total figure

Step 3: There is a provision under s.11(3) for family support "A disposition is not a transfer of value if it is made in favour of a dependent relative of the person making the disposition and is a reasonable provision for his care or maintenance. "Dependent" means "who is incapacitated by old age or infirmity from maintaining himself". I have never used this but I would think your brother's illness should qualify him as infirm and the gifts as being for maintenance. There is more info at IHTM04177 etc. Strictly speaking, this is not an exemption, it prevents a gift being a "transfer of value" in the first place so no exemption is required. It may still be necessary/sensible to mention it on page 3 of IHT403.

step 4: As pawncob says, if the gifts were made from your mother's excess income after she had covered her usual expenditure, these payments could well be exempt. The requirement that the payments be "regular" is interpreted fairly liberally and can include "when needed" if over several years. There is a specific (and detailed) form to complete in IHT403 (page 8)

[Barbara0]

Thank you.
1. We had assumed that the NRB would not be transferable as dad died in 2006 and the documents we have from the solicitor at the time showed how the NRB was used, and a trust created for mum. (the trust was later dissolved)
Without NRB transfer, the estate would be taxable.
However, upon further investigation it looks like we should be able to add anything that passed directly to mum. I will have to contact the solicitor who created the trust, as I don't understand what part might be transferable.

2. We have already used the £3k p.a. exemption on gifts to me.

3. Great -this explanation is what I had been searching for and unable to find.

4. It is also good to know that the interpretation of "regular" is not too strict, as the payments were indeed over a number of years.


Again, thank you very much indeed!