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Where Taxpayers and Advisers Meet

Children's education

kanrent
Posts: 53
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

maths
Posts: 7561
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.

AGoodman
Posts: 854
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)

Boleyn19
Posts: 1
Joined: Tue Jun 18, 2019 4:10 pm

Re: Children's education

Postby Boleyn19 » Tue Jun 18, 2019 4:19 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)
This was my understanding too. I have a question. Our son has just finished his first year at University. Wea er paying his maintenance and not his tuition fees. To help him budget and pay the large up front college fees each term we transferred the total sum at the beginning of the year and he is responsible for all his costs. Is this still allowable against IHT, carer than paying him this sum over 12 months?

AGoodman
Posts: 854
Joined: Fri May 16, 2014 3:47 pm

Re: Children's education

Postby AGoodman » Mon Jun 24, 2019 10:39 am

Sure, there's nothing that says it has to be in instalments.


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