Inheritance Tax

[Booldawg]

I was watching a programme on Inheritance Tax last night. My partner said that if you have been given money by your parents and they die within 7 years then the government can claim 40% of that money back.

I was fortunate enough for my father to help me out financially when I bought my house. He is in his late 70s but in very good health. If my dad was to die within 7 years, would the tax man be demanding 40% of what he gave me?

[dzug]

Your partner only has part of the story.

Only if his total estate (including the gift) is �275,000 or more is tax payable. That figure goes up each year.

Small gifts of �3000 in a tax year are ignored.

It wouldn't be you personally who would have to account for it - it would be the executors of his estate. Your 'share' of it wouldn't be 40% of the gift if the executors were to ask you for it, just a proportion.

The above is an oversimplification but I hope you get the gist of it

[WoWo]

I should point out that while dzug is correct you should also note that the tax is only payable on the portion over the threashold limit i.e. if his entire state was valued at �275,001 you would pay 60p tax.

This is to stop people tansferring all of there assets to their children 10 minutes before they die to avoid the tax.

While �275,000 sounds a lot, with high house prices this has started to affect a lot more people.

[Booldawg]

thanks for the input all, that has made things alot clearer to me

[spudqueen]

I think also that the amount of tax payable decreases the longer between being given the money and the 7 year limit, so if the parent died within a year of giving you the money you'd probably have to pay the whole amount of tax, if they died after 3 years it would be a less percentage, again at 5 years, an even less percentage, until you get to nil after 7 years.

[MrCrip]

Inheritance Tax is a very specialist area. I did start looking on the web to try and get an idea of what was involved and what I could do for myself.

After looking for a considerable time, the answer became quite apparent - I needed to find myself an specialist IFA in this field.

I won't get onto the rights and wrongs of the government taking money from the dead, that post is for another site!

What I will say though is that I found a company via Google who explained in lamens times the pro's and conds of Inheritance Tax. You might want to check out http://www.squareonefinancial.co.uk. I dealt with John Kelly (Business Principal).

[Pumpsticks]

What an advert!