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Where Taxpayers and Advisers Meet

Children's education

Posts: 51
Joined: Tue Dec 16, 2014 8:20 am

Children's education

Postby kanrent » Tue May 21, 2019 3:53 pm

Is paying for my children to go to university considered a life time gift and subject to IHT if I die before the 7 years

Posts: 7528
Joined: Wed Aug 06, 2008 3:25 pm

Re: Children's education

Postby maths » Tue May 21, 2019 9:18 pm

Every now and again this topic crops up in one form or another without necessarily everyone agreeing!

If parent simply gifts cash to child then this would constitute a PET and a liability to IHT may arise should parent's death occur within 7 years.

If child contracts with university to pay for fees etc to attend university but the parent discharges this debt a PET arises. An IHT charge may arise should death occur within 7 years.

If parent contracts with university to pay for fees etc for child to attend university the parent would make a chargeable transfer (ie not a PET). An IHT charge may arise instantly with an additional charge should death occur within 7 years.

In practice one of there many IHT exemptions may apply (eg expenditure out of normal income) and/or the nil rate band may be in point.

Probably, bottom line is to transfer monies to child who then discharges all costs.

Posts: 770
Joined: Fri May 16, 2014 3:47 pm

Re: Children's education

Postby AGoodman » Thu May 30, 2019 6:50 pm

No, paying maintenance/education costs of a child in full time education is not a transfer of value (i.e. not a gift for IHT). It comes under the exemption for maintenance of the family (s.11 IHTA)

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