Financial gitfts

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think you can mae a one time cash gift, so long as you survive 7years then no tax liability..?

There would be no income tax implications whatsoever. If you give him the money it does not count as his income. But if you give him the money and then die within 7 years, the money will be treated as part of your estate for the purpose of computing the amount of Inheritance Tax due. In some circumstances this may mean he will have to cough up some of your IHT bill.

If you want him to have the money and not give it back, there is no point lending it to him, since in that case it will always be part of your estate and therefore will make a contribution to the amount of IHT payable on your death.

If you want to lend it to him, that is fine too. Obviously if you then wanted him to pay you interest, you would have to pay income tax on it.

Another option you might consider is that you would be buying a share of his home. In that case, you may have to pay Capital Gains Tax when you eventually sold your share.

You'd be much better trying to get the Will changed of the person you are inheriting from, so the meony goes straight to your son, rather than to you and then to your son. This may seem overly complicated, however, if you talk to the solicitor handling the Will and/or the Executor, it should be a fairly straight forward thing to do.

Too late for changing the will i think because of very poor health etc.

Not so. The will can be changed *after* death, provided all the heirs agree to the redistribution. The mechanism is called a Deed of Variation.

The way it works is that if you intend to give part of what you would inherit to your son, which would potentially render *your* estate liable to IHT on some or all of that sum if you die within 7 years, you can avoid exposure to this liability by arranging for the will to be retrospectively changed such that whatever goes to your son is deemed, for tax purposes, to have come directly from the deceased instead of indirectly via yourself.

Thanks for the tip. Very interesting.>

I thought it only needed heirs affected by the proposed redistribution to give consent?

My understanding is that it needs all heirs if the amount of IHT involved changes.

A deed of variation costs about 200GBP (or more if complex), as an alternative consider how much life assurance you could buy with a 7 (or more likely 10) year term for the original inheritor - it might be more cost effective.

I have an old Inland Revenue (as then was) pamphlet called IHT 8 - "Alterations to an inheritance following a death". Its possibly now- out-of-date advice included

"all the beneficiaries ... who would inherit less as a result of the change must agree"

and

"If the variation means that more inheritance tax is due, the executors ... must also agree"

and, most interestingly

"If the variation ... does not change the amount of inheritance tax due, there is no need to send it ... to us" - so even though the DoV is created solely for tax purposes, HMRC doesn't necessarily need to know about it!

But will almost certainly want to see it if they decide to launch an investigation into ones tax affairs.

Thats an interesting idea to consider life assurance. I wonder if there is a limit to how much you can contribute to it.

In message , linkuk writes

Yes, for larger amounts (determined by the insurer) you have to prove why you have selected the sum assured. And of course you have to be sure have a reason to insure the life anyway.