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Where Taxpayers and Advisers Meet

Gift and loan back?

Pa954
Posts:7
Joined:Wed Nov 25, 2020 10:06 pm
Gift and loan back?

Postby Pa954 » Fri Aug 12, 2022 7:35 am

An aunt recently gifted my friend some money to buy a house (she will still use all her IHT allowances but is somewhat illiquid). The aunt is now seriously Ill so my friend would like to find a way to transfer the money to the aunt so they can use some or all of it to help with medical expenses.
If friend gifts the money I believe there is a risk of double IHT taxation if aunt does within 7 years.
What about if he loans the money back to the aunt?
1. I believe there is a provision to prevent the gift and loan back strategy to avoid the initial IHT charge (s103?)
2. But am I correct a loan back would avoid the double IHT charge because of s104c?
3. What happens if he loans the money and the aunt actually survives 7 years from her original gift?
4. Is there a way to avoid both IHT charges ? e.g he pays for the medical fees directly? Only pays it back in installments to cover known liabilities? Any other ideas?

Thank you for your help!

Pa954
Posts:7
Joined:Wed Nov 25, 2020 10:06 pm

Re: Gift and loan back?

Postby Pa954 » Sat Aug 20, 2022 1:54 pm

Polite bump on this. If someone would rather charge for the advice then that may also work as well.

AGoodman
Posts:1734
Joined:Fri May 16, 2014 3:47 pm

Re: Gift and loan back?

Postby AGoodman » Mon Aug 22, 2022 10:33 am

Basically:

1. Yes

The rest require either somebody who knows the double taxation regs off the top of their head or has the time to pore through the books. It doesn't look like (a) is around so they may have to pay or just pay the bills and sort it out later (given they presumably need to pay them anyway).


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