IHT question

[jjaammeess]

Hi I want to reduce my IHT liability and give �11000 to my son for a flat deposit.I can give away �3000 this year and �3000 from last year and then write a cheque of �250 each to 20 close relatives.The 20 relatives will then each give me �250 cash making �11000 in total.Is there anything wrong with this. Answers very much appreciated------James

[Barmaid]

Yes - the �250 x 20 in cash that you give to your son will strictly speaking fall foul of the associated operations provisions, although whether anyone will discover it is a different matter. If you are reasonably young and in reasonable good health, why not give the �11k now - as a PET (Potentially exempt transfer). If you survive 7 years, there will be no IHT on the lifetime gifts.

�6k is covered in any event with the �3k personal exemption. The IHT on �5k is not going to be worth the candle (about �2k).

[Captain Spod]

Totally agree with Barmaid. I would just add that the potential charge in the seven years following the gift can be insured using an "Inter Vivos" policy. Because these cover a reducing amount over a short term they are relatively cheap and the benefit would be paid direct to the heirs, keeping it outside your estate.

[jjaammeess]

hi thanks for your answers---I am retired and would worry about the 7 years.What is this insurance you can get--James

[Captain Spod]

OK, the game's up. I work for an insurance company! A policy of the type above for a male non-smoker, 70 years old in average health would cost less than �10 per month. I suggest you google "Inter Vivos Insurance". Hope this helps.