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Should some one receive their inheritance early to set up a business - before the giver of the money is dead, is there tax to pay?
We're not talking millions but it's half the value of a detached house in north Wales. (It's not for me, it's my cousin).
Depends when they die: i.e. the sooner they die, the more tax will be due.
At its most simple, if the giver lives for seven years after giving the money then there is no tax to pay.
Doesn't inheritance tax only apply when one person gets >£325k?
No, it's when the estate is worth more than £325k, I think. With exceptions, of course.
Oh. I thought that a brother and sister could get <325k each and not pay tax.
I believe you can receive 16k per year as a gift before tax. Google it to confirm.
Otherwise the giver has to live 7 years after the gift
Currently £325k for the whole estate, despite how many times it's split.
So is the first £325k tax free then whatever over that amount is taxed?
Yes - just like income tax
So is the first £325k tax free then whatever over that amount is taxed?
Ah! That's what I thought! I knew there was something like that!
The answer is: it depends. Sorry.
If the donor dies within seven years of making the gift then there might be a charge to inheritance tax, which will depend on the size of the gift, the size of the donor's estate at the time of death, any other gifts the donor made (principally in the seven years before death), and how long after making this gift the donor died. If there is a charge to IHT it will fall firstly on the recipient of the gift, but the donor's will may provide for their estate to pay the tax instead.
If a property is being given away now then there may also be a charge to capital gains tax now as well for the donor.
I believe you can receive 16k per year as a gift before tax
You can give away £3k pa as understand it, as a lump sum - from the donor.
Smaller amount is I think £250 per year to numerous gold, and to close relatives on their wedding again £3k as a one-off.
Otherwise it'll come under gifts, Potentially Exempt Transfers..
If they ain't dead, then it is a gift.
http://www.money.co.uk/guides/how-do-i-gift-money-without-being-taxed.htm
With exceptions, of course.
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