A few IHT queries

[Petal1967]

Doing some IHT planning and not sure how/if the following would impact my position:

1. If I die within 7 years of making gifts but the size of my charity donations in my will means the 10% reduction in IHT is applicable (40% to 36%) does the rate after taper relief on the gifts benefit from the 10% reduction as well ?

2. I remarried several years ago. Can I transfer money to my husband for him to then send on to my adult children (his stepchildren) to use up his £3k annual gift allowance ?

3. Can my husband make use of the £5k wedding gift allowance to give £5k to one of my children (my husband's stepchild) when they marry next year as well as me sending them £5k myself ?

4. Can I give £5k to my daughter when she gets married next year and also give £1k to my future son-in-law (i.e. who she is marrying) using the wedding gift exemption ?

Thank you

[AGoodman]

1. Don't know but it is probably irrelevant. The first £325,000 of non-exempt gifts you make in your last 7 years are covered by the nil rate band and taxed at 0%. Taper relief only applies if you make gifts in excess of £325,000 in the seven years prior to your death.
2. Yes - ideally he wouldn't make the onward gift immediately after receiving the money from you.
3. Yes, you can each give £5,000 to a child or step child who is marrying
4. No. The limit is £5,000 per marriage by any individual donor. If you gave your son £5k, your husband could give up to £2,500 to your future son-in-law.

The legislation for 3 and 4 isn't too difficult to read if you want to see the detail:

https://www.legislation.gov.uk/ukpga/1984/51/section/22

With gifts, bear in mind that making a large PET is often better than holding onto the money and trying to use the various exemptions.

For example:
(a) if you had £100k and gave £3k a year over your last 7 years, you would be left with £79k in your estate
(b) if you gave away the £100k in the first year and lived 7 years, the entire £100k would be outside your estate
(c) if you gave away £100k in the first year but died 6 years later, £97k would be in your estate.

(c) is worse than (a) but you have lost the opportunity to benefit from (b). The difference is more marked with larger sums where the annual exemption becomes less relevant.

[Petal1967]

Thank you so much for your reply.

1. In my current situation taper relief would apply - I am only a year in from making gifts in excess of the nil rate band so 6 years to go.
2. Is there a recommended timeframe between the two transactions ?
3. Perfect
4. Understood.

I did have a look at the legislation - can you point me to any quidance on how early in advance of the wedding the gift can be made please ?

Really appreciate your help on this

[jackwilliam11]

Doing some IHT planning and not sure how/if the following would impact my position:

1. If I die within 7 years of making gifts but the size of my charity donations in my will means the 10% reduction in IHT is applicable (40% to 36%) does the rate after taper relief on the gifts benefit from the 10% reduction as well ?

2. I remarried several years ago. Can I transfer money to my husband for him to then send on to my adult children (his stepchildren) to use up his £3k annual gift allowance ?

3. Can my husband make use of the £5k wedding gift allowance to give £5k to one of my children (my husband's stepchild) when they marry next year as well as me sending them £5k myself ?

4. Can I give £5k to my daughter when she gets married next year and also give £1k to my future son-in-law (i.e. who she is marrying) using the wedding gift exemption ?

Thank you

Hi, happy to share some guidance on your IHT questions—though do bear in mind this isn’t a substitute for professional advice, as your circumstances could affect the outcome.

Gifts within 7 years & charity reduction: The 10% IHT rate reduction for leaving 10%+ of your estate to charity applies to the overall IHT due on your estate, including any taper relief applied to lifetime gifts. So yes, the reduced 36% rate would apply after taper relief on those gifts.

Transferring money via your husband to adult stepchildren: Your husband can use his £3,000 annual gift allowance to give to your children (his stepchildren), but he must make the gift himself. You can’t “piggyback” your husband’s allowance; he must have clear intent and control of the gift.

Wedding gift exemption (£5k): Each of you can use your individual £5,000 wedding gift allowance. So yes, your husband can give £5k to your child and you can also give £5k to the same child—the allowances are separate.

Gifting daughter & future son-in-law: Yes, the wedding gift exemption can be used per person. You could give £5k to your daughter and also £1k to her future spouse, assuming the spouse is the direct recipient of the gift.

In all cases, it’s worth keeping a paper trail and documenting the gifts clearly to avoid any misunderstandings with HMRC.

[Petal1967]

Thanks so much for your reply Jack, that's extremely useful.

[jackwilliam11]

Doing some IHT planning and not sure how/if the following would impact my position:

1. If I die within 7 years of making gifts but the size of my charity donations in my will means the 10% reduction in IHT is applicable (40% to 36%) does the rate after taper relief on the gifts benefit from the 10% reduction as well ?

2. I remarried several years ago. Can I transfer money to my husband for him to then send on to my adult children (his stepchildren) to use up his £3k annual gift allowance ?

3. Can my husband make use of the £5k wedding gift allowance to give £5k to one of my children (my husband's stepchild) when they marry next year as well as me sending them £5k myself ?

4. Can I give £5k to my daughter when she gets married next year and also give £1k to my future son-in-law (i.e. who she is marrying) using the wedding gift exemption ?

Thank you

Good questions — IHT rules can get tricky.

The 10% charitable rate (36%) applies to your estate, not to taper-relieved gifts, so those gifts are usually still at 40% before tapering.

You can gift to your husband tax-free, but if he immediately passes it to your kids, HMRC might still treat it as your gift.

The £5k wedding gift allowance only applies to someone’s own child — not stepchildren unless adopted.

Yes, you can give £5k to your daughter and £1k to your future son-in-law separately under the wedding gift exemptions.

Worth checking specifics with a tax adviser for peace of mind.