equty release / gift

[jayez]

I was given a large sum of money (in excess of �50k about three years ago) from my father who passed away in July of this year.
My mother is still alive can you tell me if mt fathers estate will be subject to IHT or can it be avoided

[dzug]

Possibly - it depends on the overall size of your father's estate (including the �50K) and how much of it went to your mother.

Anything that goes to your mother is exempt from IHT (for now). If the rest of the estate (including your �50K) is less than �285K, then there will be no IHT. If it's more, then there are still ways of avoiding it by using a deed of variation to set up a discretionary trust - you'd need expert advice (and the agreement of all beneficiaries) to do this.

[Finance Guy]

This sum will be regarded as a 'Lifetime Transfer' and, as such, will not be regarded as part of your Dads estate for IHT purposes.

The tax that is applicable is Capital Gains Tax (CGT) and you will be liable to pay it, as your father passed away within 7 years of making the 'gift'. There is a sliding scale of liability util this point, with your liability being around 20%, less your CGT annualallowance (if unused on other capital gains).

Contact a local IFA or Tax specialist to get full guidance.

Best regards

Jeff

[Finance Guy]

The above related to your �50k +, not your Dads estate. Presuming your Mum and Dad were still married when your Dad died, there is no IHT between spouses, so she will be exempt .

I recommend seeing an IFA and organising the most tax efficient way for this estate to be divided up between you and any brothers, sisters, etc when your Mum passes away one day. If the estate is broken down between you, so long as each portion is below the IHT threshold at the time, there will be no IHT to pay. A WILL IS ESSENTIAL.

Good luck

[dzug]

Finance Guy - exactly what 'Capital Gain' is involved? It's INHERITANCE TAX that is involved. And it's the estate that pays it, not the individual.

If there was any CGT (father sold assets to make the gift) it would have been paid at the time by him.

And you DON'T avoid IHT by splitting the estate down into bits - it's regarded as a whole. You CAN avoid or reduce it by setting up a trust or trusts.

Consulting an IFA is good advice - the one bit you are spot on about.

[Finance Guy]

The �50k was given 3 years ago, long before Jayez' Father died - that was not an inheritance as such, it was a Lifetime transfer, or a 'Potentially exempt transfer'. It is NOT subject to inclusion within the deceased estate.

Rather than reading a potentially endless debate here Jayez, go see that IFA. Ensure that you are seeing a reputable one, perhaps Bank or solicitor recommended.

Good luck