Inheritance tax is complicated and there are all sorts of exemptions and allowances. So when tax planning you should always take specific advice from a solicitor or accountant.
In simplest terms if you have property and assets, including a house or houses worth more than £325,000 when you die your estate could be liable for inheritance tax. If you give some of your money away, to your children for a deposit for example, during your life, but die within seven years of the gift then the gift may be added to your estate and may result in an inheritance tax charge.
So it’s best to give at a time when you are likely to survive more than seven years if inheritance tax mitigation is one of your aims.
You also need to be careful if you give the money to your children as a deposit but retain a benefit. That could be part ownership of the house they are buying by you, or even if you live in the house yourself with them. This could be construed as retaining a benefit in the gift, so the seven year clock does not start ticking and the gift remains part of your estate for calculating inheritance tax.
If you are contemplating giving a substantial gift to you children take professional advice on it. It may be that by using other exemptions your estate may not be liable to inheritance tax anyway or there may be ways to structure the gift to mitigate tax liabilities. Contact our Wills and Probate solicitors to discuss this on 0161 696 6238 or complete our online enquiry form and we will contact you directly.