Gifts made in the last 7 years of your life count, in general, towards your estate when inheritence tax (IHT) is assessed. But gifts to your spouse are exempt. But is the exemption for your spouse at the date of the gift or your spouse at the date of your death?
For example:
You make a gift to your spouse, then divorce them, then die, all within 7 years. Is the gift exempt?
Conversely:
You make a gift to a friend, then marry them, then die, all within 7 years. Is the gift exempt?
Robert
In message , Robert writes
Yes, so long as the IR dont reckon you were doing it to fiddle them out of dosh, like you knew you were going to die and to get divorced and so arranged things accordingly. BUT if it was a divorce settlement then that would be OK.
No.
It's just one of those things, isn't it! Yuo need to make reasonable assumptions.
I'd say yes. Gifts to spouses are exempt for all purposes. Not just IHT but CGT as well. A husband and wife "are as one" and can shuffle stuff around between each other to their hearts' content, but as soon as they cease to be spouses, that's the end of it. The shuffling must stop, but gifts made are gifts made, and what's done is done.
I'd say no. The gift was not made to a spouse. There may be an allowance for "gift in contemplation of marriage" though, also known as a "sort of" wedding present.
In message , Ronald Raygun writes
The written statute would agree with you, but over the last few months the IR bods in the CTO are taking a more robust stance. The gifting of assets willy nilly gives them cause for concern under an act whose name I cant remember at the moment in a section that is numbered more than
100 and less than 200, but could be s104, but I could be wrong.
You probably are, and so are they. If the written statute agrees with me, and they disagree with me, then they disagree with it. Not a robust position for them to be in, I'd say.
Not sure about divorce settlements. I had a reason to know about this a few years ago, and for the transfer to be free of CGT (I know CGT isn't IHT) the couple still had to be not separated "legally or in fact" i.e. still living together. A transfer under a divorce settlement ordered by a Court is exempt from stamp duty only.
I would love to know how the IR can object to somebody terminally ill but compos mentis, giving everything to their spouse. Presumably, assets held in joint names will pass without challenge...
John, thyank you for your answers. May I ask a related question, as you seem to know the statute? Capital Traxes make you take the lifetime gifts off the nil band first, before you use the remainder of the band on the rest of the estate. This means that the taper, which applies to the tax on the gifts not to the gifts themselves, is often worthless since the tax is zero. I can't think that this is what paliament intended.
Is it specified this way in the statute?
regards,
Robert
In message , Ronald Raygun writes
Mr Tweedy seems to disagree with you, and sadly, as deputy head of the CTO he seems to win quite a lot.
In message , Robert writes
Thats right.
I think its what the IR intended though!
I think its the 1984 Inheritance Tax Act but will check.
The obvious deduction, then, would heve to be that, contrary to what you said, the statute does not agree with me.
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