Giving a present.

[Lootman]

Maintenance. Although not strictly an exemption, gifts made for the maintenance of family members (i.e. spouse/civil partner, minor children, children in full time education and relatives financially dependent on the person making the gift) are not treated as transfers for IHT purposes so no liability will arise. You could certainly deem much of the 'gifts' described above as being covered by this, and they do not need to have been made out of the donor's surplus income.

But then could I not argue that if I give money to X for something that X needs and because X cannot afford it himself, then by definition X is at least partly "financially dependent" upon me. Therefore those transfers are exempt from IHT? And so IHT only applies for gifts of non-essential items or funds?

re the value of the gift, where it is a PET, it is the diminution of the donor's assets that count as the value of the gift, so the comment about the car - it would be what the car cost the donor.

But what about the case where that asset depreciates? In 7 years a vehicle could easily lose 50% or more of its capital value. Some items might lose all their value in that time period. And that would also have been the case had the donor retained the vehicle, whereupon its value in the estate is determined by its current value and not based on what you happened to pay for it?

Again, what if the gifted asset has greatly appreciated? Is the taxman then happy to use the much lower original value? It seems to me that if you are correct about this then there is an inconsistency about the way real assets are valued for IHT purposes. If I keep them then they are valued at current market, but if I gifted them then it is based on original value. In which case then should I always gift things likely to appreciate rather than likely to depreciate?

[stevensfo]

Another method of transferring wealth to your son is for you to buy gold coins online that are also UK legal tender eg Brittanias, Sovereigns and Half Sovereigns. Give those coins to your son and he can sell them for cash which he can do anonymously if he walks into a bullion dealer and walks out with the cash. There is no VAT or CGT on the sale of these coins and no reporting requirements.

The only caveat is that your son might want to be accompanied by a big strong friend when he sells the coins for cash!

HTH
Neddy

Seriously, can you still do that? I thought I read a few years ago that you now have to show ID for buying and selling gold bullion.

If you can still do this anonymously, I imagine that the dealer must have one hell of a mark-up price!


Steve

[stevensfo]

Maintenance. Although not strictly an exemption, gifts made for the maintenance of family members (i.e. spouse/civil partner, minor children, children in full time education and relatives financially dependent on the person making the gift) are not treated as transfers for IHT purposes so no liability will arise. You could certainly deem much of the 'gifts' described above as being covered by this, and they do not need to have been made out of the donor's surplus income.

But then could I not argue that if I give money to X for something that X needs and because X cannot afford it himself, then by definition X is at least partly "financially dependent" upon me. Therefore those transfers are exempt from IHT? And so IHT only applies for gifts of non-essential items or funds?

re the value of the gift, where it is a PET, it is the diminution of the donor's assets that count as the value of the gift, so the comment about the car - it would be what the car cost the donor.

But what about the case where that asset depreciates? In 7 years a vehicle could easily lose 50% or more of its capital value. Some items might lose all their value in that time period. And that would also have been the case had the donor retained the vehicle, whereupon its value in the estate is determined by its current value and not based on what you happened to pay for it?

Again, what if the gifted asset has greatly appreciated? Is the taxman then happy to use the much lower original value? It seems to me that if you are correct about this then there is an inconsistency about the way real assets are valued for IHT purposes. If I keep them then they are valued at current market, but if I gifted them then it is based on original value. In which case then should I always gift things likely to appreciate rather than likely to depreciate?

I've never been in a situation like this, so apologies for a silly question, but I assume that an executor has to go through the deceased accounts very carefully to get an idea of the estate's value.

So if he sees 20-30K spent on a car a few years ago, what can he do if the car is not there? Or 30K spent at Sotheby's on a painting that just happens to be worth millions? Does he then question all the relatives? Contact the DVLA to find the current owner of the car? Call the police about the painting when nobody owns up? Is he actually obliged to do this? If the executor 'does' know who has the car/rare Van Gogh but declines to declare it, is he breaking the law? I guess he must be, but how could you prove it?

Steve ... off to polish my gold bars and forge another Rembrandt.

[scrumpyjack]

On the question of the car, the value of the car is the value lost by the donor in buying the car, but then there is also a provision, as I recall, that if the asset given has a lower value at the date of death, that lower value can be substituted. The examples tend to quote shares or property but not naturally depreciated assets like a car.

re how diligent an executor must be:
you must make all necessary enquiries and do everything in your power to establish what gifts have been made, who received these and what their value was.

This could include speaking to close friends and relatives of the deceased to see if they know of any gifts, asking Beneficiaries directly if they have received a lifetime gift and checking the deceased's bank statements or asking the deceased's bank for details of any significant transactions. You should keep a comprehensive record of all of this correspondence.

So if you ask the relatives and they say no gifts were made, and if you have looked through available financial records and followed up any obvious leads, I would have thought that was sufficient.

[Lootman]

I assume that an executor has to go through the deceased accounts very carefully to get an idea of the estate's value.

So if he sees 20-30K spent on a car a few years ago, what can he do if the car is not there? Or 30K spent at Sotheby's on a painting that just happens to be worth millions? Does he then question all the relatives? Contact the DVLA to find the current owner of the car? Call the police about the painting when nobody owns up? Is he actually obliged to do this? If the executor 'does' know who has the car/rare Van Gogh but declines to declare it, is he breaking the law? I guess he must be, but how could you prove it?

If an executor knows about an asset that would lead to an increased IHT liability and hides that information, and then distributes the assets of the estate, then he or she could later be held personally liable for the extra tax due, if it is discovered of course.

A neutral executor would normally never do such a thing. But often the executor is also a beneficiary and may even be that gift recipient, and then I feel sure there is sometimes a temptation to "forget" about the item.

re how diligent an executor must be:

you must make all necessary enquiries and do everything in your power to establish what gifts have been made, who received these and what their value was.

This could include speaking to close friends and relatives of the deceased to see if they know of any gifts, asking Beneficiaries directly if they have received a lifetime gift and checking the deceased's bank statements or asking the deceased's bank for details of any significant transactions. You should keep a comprehensive record of all of this correspondence.

So if you ask the relatives and they say no gifts were made, and if you have looked through available financial records and followed up any obvious leads, I would have thought that was sufficient.

Yes, I think what is "sufficient" means the steps a reasonable person would take to determine all the assets. Obviously that is a judgement to be made because there is potentially no limit to the research you could do. But to my mind there is a law of diminishing returns if you start, say, looking through 7 year's worth of credit card transactions and then researching each line item just in case it might have been a gift. Few executors would go that far.

And an executor should rely on the answers given by the close family and other relevant parties. If the deceased's brother tells you that he never received any gifts in the last 7 years, and you have no compelling reason to disbelieve him, then you give him the benefit of the doubt. After all an executor has no legal power to compel testimony under oath, nor to examine the recipient's financial records.

Now that a lot of financial activity takes place online, the executor's task is more difficult. Was there is a paypal account set up incognito? Did he pay cash for prepaid debit cards and give them away? How would anyone know?

[scrumpyjack]

re the above, the same principle as was laid down in court a very long time ago about the responsibilities of the auditor: 'The auditor is a watchdog, not a bloodhound"
(Unfortunately nowadays they tend to be lapdogs!

[stevensfo]

re the above, the same principle as was laid down in court a very long time ago about the responsibilities of the auditor: 'The auditor is a watchdog, not a bloodhound"
(Unfortunately nowadays they tend to be lapdogs!

At the end of June, our labs will be audited for certain ISO standards.

I can assure you that they are not bloodhounds. More like vampires!

When I worked in London, we had some crazy 'Safety Audits'.

The trick was to let them find something.... anything... just to keep them happy. A large box hiding a fire extinguisher was one way.

The auditors ticked the 'Non-conformity' and left with smiles on their faces.

While we lit our cigarettes next to the Inflammables cabinet, mixed the lab alcohol with tonic and celebrated another successful audit.

Steve

[Bouleversee]

Stevensfo wrote:

"But what about the case where that asset depreciates? In 7 years a vehicle could easily lose 50% or more of its capital value. Some items might lose all their value in that time period. And that would also have been the case had the donor retained the vehicle, whereupon its value in the estate is determined by its current value and not based on what you happened to pay for it?

Again, what if the gifted asset has greatly appreciated? Is the taxman then happy to use the much lower original value? It seems to me that if you are correct about this then there is an inconsistency about the way real assets are valued for IHT purposes. If I keep them then they are valued at current market, but if I gifted them then it is based on original value. In which case then should I always gift things likely to appreciate rather than likely to depreciate?"

Some of the shares I have given my children and grandchildren over the years, crystallising capital gains, thinking they were likely to appreciate, have now lost a huge amount of their value, e.g. James Fisher and Photo-Me, and in several cases are not paying dividends. The same applies to shares bought with cash donated for JISAs or ISAs more recently. There ought to be some allowance for this but I doubt there will be. The fact that we don't really know what the situation is says something about the law and also about us.

[scrumpyjack]

Stevensfo wrote:

"But what about the case where that asset depreciates? In 7 years a vehicle could easily lose 50% or more of its capital value. Some items might lose all their value in that time period. And that would also have been the case had the donor retained the vehicle, whereupon its value in the estate is determined by its current value and not based on what you happened to pay for it?

Again, what if the gifted asset has greatly appreciated? Is the taxman then happy to use the much lower original value? It seems to me that if you are correct about this then there is an inconsistency about the way real assets are valued for IHT purposes. If I keep them then they are valued at current market, but if I gifted them then it is based on original value. In which case then should I always gift things likely to appreciate rather than likely to depreciate?"

Some of the shares I have given my children and grandchildren over the years, crystallising capital gains, thinking they were likely to appreciate, have now lost a huge amount of their value, e.g. James Fisher and Photo-Me, and in several cases are not paying dividends. The same applies to shares bought with cash donated for JISAs or ISAs more recently. There ought to be some allowance for this but I doubt there will be. The fact that we don't really know what the situation is says something about the law and also about us.

Where the subject matter of the gift has fallen in value between the date of the gift and the date of death, ‘fall in value relief’ can apply. This essentially charges IHT on the lower value, rather than the value at the date of the gift.

So if you gave them shares which have gone down in value, at your death the value of the PET can be the market value at the date of death.
But if you gave them cash and they spent it buying shares, that relief would not apply.

[Bouleversee]

Scrumpyjack wrote:

"Where the subject matter of the gift has fallen in value between the date of the gift and the date of death, ‘fall in value relief’ can apply. This essentially charges IHT on the lower value, rather than the value at the date of the gift.

So if you gave them shares which have gone down in value, at your death the value of the PET can be the market value at the date of death.
But if you gave them cash and they spent it buying shares, that relief would not apply."

What if I put cash directly into their JISA by dd (which is what I did) and their trustee (father) invested it in shares for them which subsequently lost value? The grandchildren had no choice in this.

[scrumpyjack]

Scrumpyjack wrote:

"Where the subject matter of the gift has fallen in value between the date of the gift and the date of death, ‘fall in value relief’ can apply. This essentially charges IHT on the lower value, rather than the value at the date of the gift.

So if you gave them shares which have gone down in value, at your death the value of the PET can be the market value at the date of death.
But if you gave them cash and they spent it buying shares, that relief would not apply."

What if I put cash directly into their JISA by dd (which is what I did) and their trustee (father) invested it in shares for them which subsequently lost value? The grandchildren had no choice in this.

IANAL but I would have thought the amount of gift was the cash going into the JISA sadly, not what was subsequently done with it. If you did it regularly, could it be gifts out of income and so exempt for that reason?

[Lootman]

Scrumpyjack wrote:

"Where the subject matter of the gift has fallen in value between the date of the gift and the date of death, ‘fall in value relief’ can apply. This essentially charges IHT on the lower value, rather than the value at the date of the gift.

So if you gave them shares which have gone down in value, at your death the value of the PET can be the market value at the date of death.
But if you gave them cash and they spent it buying shares, that relief would not apply."

What if I put cash directly into their JISA by dd (which is what I did) and their trustee (father) invested it in shares for them which subsequently lost value? The grandchildren had no choice in this.

IANAL but I would have thought the amount of gift was the cash going into the JISA sadly, not what was subsequently done with it.

Yes, I would think that for cash gifts only the amount you gifted matters. Whereas if the gift was an asset then there may be reliefs that you can apply.

[Bouleversee]

I haven't checked yet but I think the certificated shares I gifted may be out of the 7 yr time frame by now; sadly the JISA losses are recent. Can't win! I'll have to see if I have any shares left worth gifting which requires rather more effort than just transferring cash to the JISAs. I have very little cash left anyway and I need to spend a bomb on things in my house and garden which have been rather neglected of late. Everything is going to cost a lot more so some shares will have to be sold for that.

How much cash can I give for a 50th or 18th birthday without the taxman wanting 40% when I die? Is that stuck at £250? I bought a computer for the eldest grandchild as he was about to start Uni and in case I popped my clogs before the others reached their l8th I paid the same sum into their JISAs, which are attached to their parent's accounts and I don't think it has been invested yet. God knows how they are ever going to get on the housing ladder. It's ridiculous that these allowances don't go up with inflation.

[Drahcir]

You can't invest into 2 S&S ISAs in one tax year, but you CAN invest in a LISA and a S&S (or Cash) ISA in the same year.

Hi, I was looking at that. Is a LISA treated differently from a cash ISA, even if it is a cash LISA?

EDIT: The question being, if one has a S&S LISA and an S&S ISA, is it possible to put money into both in a single year?

After a chat with a firm offering S&S ISAs and S&S LISAs, I am informed that I can indeed open one of each (today) and put £4,000 in the LISA and £16,000 in the ISA.

Just to answer the question, not to say what will actually happen!