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Gift within the seven year rule

Gift within the seven year rule

Postby Uncle_George » Wed Mar 09, 2016 10:06 am

Hi All,

A close relative has recently died and I am executor and one of a few beneficiaries .

The relative gave me a money gift above the £3000 per year limit around a year ago.

I understand that this has to be declared on the income tax form IHT205, because of the seven year rule.

What I am concerned about is wether the money gift has to be put back into the estate?

The total of the estate including the money gift does not exceed the £325000 tax limit.


Thanks in advance

Uncle_George
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Re: Gift within the seven year rule

Postby atticus » Wed Mar 09, 2016 10:10 am

My understanding is that the payment may be taxable, but does not have to be repaid.

NB the IHT form relates to Inheritance Tax, not Income Tax.
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Re: Gift within the seven year rule

Postby dls » Wed Mar 09, 2016 7:59 pm

It does not make the gift repayable.
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Re: Gift within the seven year rule

Postby Goldensyrup » Thu Mar 10, 2016 12:22 am

Payment back does not need to happen. High value transfers of money, investments or even antiques bequeathed before someone dies are known as ‘potentially exempt transfers’.
They are exempt from IHT only if they live for seven years after the transfer. But if they die within this period, these gifts will be taxed at their current value, not their value when they were given away.
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Re: Gift within the seven year rule

Postby dls » Thu Mar 10, 2016 2:38 pm

in other words it can give rise to issues about how the tax ix calculated, and how has to pay it, but not as to the finality of the gift.
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