Money Left To You.

[quizzkid]

If you are left money in a will and you decide to give it to somebody else are you liable for tax if you are in your 80's?

[bhg481]

I don't see how you can be liable for tax if you give money away. If it is a large sum and you pop your clogs within 7? years the recipient may have to pay some tax, depending on the value of your estate.

[Buenchico]

Which tax are you referring to?

There is no such thing as 'gift tax'; you're free to give away as much as you like without any tax being payable.

If you die within 7 years of making a gift though, when it comes to assessing the value of your estate, any gift made during that period will still be included (either in part or in whole, depending upon when it was made) for the purposes of calculating any Inheritance Tax due.

However there's no Inheritance Tax to be paid anyway if the value of your estate is less than £325,000 (or £650,000 if your partner pre-deceased you and left everything to you) at the time of your death.

[Peter Pedant]

Strikes me as a straightforward question

Suppose an eighty year old worth £400k ( above the IHT boundary ) is left £10 000. and there has been IHT paid on this estate ( 40% about £322k )

and then the 80 y o passes on the money to some lucky fellow like qk. Is it a PET for IHT purposes - -- answer yes - unless the 80 y o lives until 87 when it passes out of the estate for IHT purposes

and in this case the donee is responsible for the tax and not estate innit ? I think so

and so what is the answer - get the old boy to leave it direct to the donee
OR if it is after the death then a deed of variation of the will

[fiction-factory]

I agree PP- provided quizzkid meant "could the estate liable for IHT". If he/she meant is he/she liable for any tax the interest is no- apart from possible any interest on resultant savings, although even that is unlikely under the new regimes

[Peter Pedant]

yeah agreed FF
I had to look at the question with a certain amount of squidge

[joggerjayne]

Kinell, that's a big ferkoff crab! (Japan)

[joggerjayne]

Oops, wrong thread.

[quizzkid]

Thank you for your help. It is £80,000 we are talking about but his estate is not worth anything like 325,000 but he was worried about losing some of his pension rights and if he would be liable for tax.

[Peter Pedant]

ask a different question and you get a different answer !

The £80k will / would be tax free ( IHT) because the estate pays the tax usually ( different in Napleonic Code countries where the lucky recipient is liable for the tax and it is commonplace for them to say ah non merci - purely on the grounds they cant afford to pay the tax that comes with the bequest )

If he is on means tested benefits, then yes that would affect them if savings are assessed ( yes this would be savings )

the benefit he is likely to be on is this

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/372545/dwp027-102014.pdf

and yes if you read it - he would lose it - for the time he takes to spend £80k

[quizzkid]

Thank you Peter Pedant for your help.

[ToraToraTora]

No but the receiver may be liable for IHT if you die within 7 years. There is no gift tax per se.

[Barmaid]

PP had it in his first answer. Do a Deed of Variation. Then the gift is assessed as coming from the deceased. Doesnt affect anything then.

[Peter Pedant]

HI Barmaid - thx for the bouquet
and nice to see you contributing.