cash gift from relative

[moneypenny]

Ok I know this isn't a usual topic for the website but I am realy stuck with this one and there is always someone out there who usually can help.

In 2007 approx 6 months after my husbands death my brother gave me a cash gift of £10.000 to help out. My brother died last week. Will I have to hand this back because I am under the 7 year threshold.

I have been told I will have to pay inheritance tax on it even though his estate will be valued at below £20.000 he lived in a council flat, I think that is nonsense. I know the money will be classed as part of the estate so how will this effect me. There are 2 other siblings and it is unlikely there is a will.

Any help gratefully received I have hit a brick wall.

 

[TonyW2]

IHT would only be relevant if his estate was over £325000.
Therefore there are no tax implications or payments to be made.
The seven year period only applies if the estate including any gifts made within 7 years of death exceeds the IHT allowance.
Thus if the facts given are comprehensive, IHT is irrelevant and no repayment is due.

If the £10000 was an outright cash gift (not a loan) then it does not need to be repaid. Problems will only arise if the nature of the gift is disputed.

If the estate is over about £12000 in accesible "cash" and the deceased were claiming certain forms of benefits, there could also be some dispute.

 

[TheVictorian]

Yuo can be gifted up to £3k a year I think without any tax implications. £10k spread over 5 years would be fine.

 

[jdpjamesp]

As far as I know you should just have to pay an inheritance tax on it, but it is pro rata. In other words you just pay 2 7ths of the tax as that is all that is left of the 7 years.

To be sure though the best thing to do would be to phone HMRC IMO.

 

[moneypenny]

Thankyou.

Yes it was an outright gift and my siblings would not dispute that.

He was on benefits for many years with health problems and very reclusive didn't want to spend on himself didn't go out, his computer was his link to the outside world, always lived alone no wife or children so he could have accumulated more than the £12.000

 

[TonyW2]

Suggest that you check with the CAB. (Citizens Advice Bureau) for expert and correct advice.
The statements in the posts above re partial exemption are incorrect/incomplete.

When applying for probate, the gift should be declared.

 

[JohnD]

I have been told I will have to pay inheritance tax on it even though his estate will be valued at below £20.000

Who told you that, and why?

 

[jazzcricket]

I've been having to look into a complicated inheritance tax situation for a family member, and i am pretty sure, no inheritance tax will be payable.
as others have stated, only estates over 325K are liable basically.
the seven year threshold is designed to minimise liability over the period of time, although in truth,any real benefit doesn't kick in till after the 3rd yearhas expired.
If you are worried, look up the local tax accountants in your area, most of them offer a free consultation,of up to an hour.For such a straightforward matter, they should be able to put your mind at rest very quickly. I've been to see a couple of chartered tax accountants(better than certified accountants) and was pleasantly surprised at how much info they gave me in the free 1hr consultation.I left with a much clearer picture of the situation. Now i just have to pick one that seemed the most helpful and genuine.

 

[big-all]

Yuo can be gifted up to £3k a year I think without any tax implications. £10k spread over 5 years would be fine.

its 3000 yes but a maximum off £500 i think it is per person

as others have said its only for inheritance tax purposes
if he was married and his wife died before him he gets his wives inheritance tax allowance as well even if she died before the new system

 

[moneypenny]

Thanks everybody, I will try the CAB, because although he he was adamant it was a gift I sort of always thought of it as his and I told him if he ever hit hard times he could take it back but he never did want it.

Just want to do the right thing.

 

[TonyW2]

You have no problems about the IHT.
Just check the effects--if any---on benefits when giving away the money or having it available as recoverable if needed.

 

[moneypenny]

TonyW2

You are right.

This money was paid to him and not intended for my use and I think that now he is deceased and will not be recalling it it should be returned to his estate.

 

[big-all]

if it was a cheque then look back through the stubs if you can find them or through his diary financial ledger computer or other source and see how it was described [loan/gift/etc]

 

[moneypenny]

He definitely intended it to be a gift he made that clear.

I don't have access to his cheque stubs and after 5 years I'm not sure they will still be around even doubt he filled them in.

The cash has been sat in my account I told him if he needed it it was there. But now he is gone it just doesn't seem right not to declare it if it was accumulated from disability benefits.

I had to trace him in 2006 because I was an executor for a very small inheritance he was entitled to but he would not accept the money. He was happy with limited email contact with me for the ast 6 years of his life. he was 75 when he died.

He was alcohol dependant from early middle age and lived in almost poverty to support his habit, and when he managed to stop drinking he still chose to maintain that lifestyle, his neighbour said she couldn't persuade him to spend money he became very reclusive. I have come to the conclusion since he died the money he accummulate was the money he would have normaly spent on drink. He was entitled to to his income just didn't use it except for basics and tobacco.

But I feel it would be unjustifiable now to not declare. I assume if that takes his estate over his £16.000 Social services will reclaim the excess.

PS> Spoke to a probate solicitor today who said any direct gift is none taxable and does not constitute any part of the estate unless that estate was over the threshold IHT.

 

[big-all]

whilst its true most benefits are reduced if you have 6k to nowt at 16k
there is no checking its all on trust so you will have no problem from the dhss/ or other government departments it was his responsibility not yours to declair it
under no circumstances have you done anything wrong or have anything to worry about

my suggestion is assuming all debts and funeral costs have been discharged from his estate
work out who is entitled to a share of hist estate and what amount
when all the official distribution has been sorted out then you can distribute as you see fit with the same criterior applying to you [7 year rule] keeping in mind you may have a genuine share if no children have first call